2 Britain’s choice Our guide to the 2017 election JUNE 2017 BRITAIN’S CHOICE

ON JUNE 8th Britain will hold a general election. Since the last time the country went to the polls, in 2015, it has changed dramatically. The vote for last year has set it on a new, uncertain course; all its main political parties have changed their leaders, who offer contrasting visions of the country’s future—and a decisive break with its past. Voters must now decide which they prefer. During the campaign we have published numerous articles on the election and the issues surrounding it. To help interested readers, we have assembled a selection of them below, starting with our leader explaining how we would cast our own vote.

Zanny Minton Beddoes, Editor-in-chief

CONTENTS

3 Our endorsement 12 Nationalising industries 18 The leaders of both main parties have A high short-term price and higher long- The two Theresas: one thoroughly turned away from a decades-old vision of term cost competent, the other less so an open, liberal country 13 Social care 19 The elderly vote 4 The background A magnificent U-turn raises questions Why the elderly are keener than ever on British politics is being reshaped by the about Tory competence the Conservatives collapse of the neoliberal consensus 13 20 Online campaigning 8 Election manifestos Britain’s poor face more painful benefit Digital democracy is changing the way The three main parties are proposing cuts whoever wins on June 8th elections are fought, for better and very different policies. Yet they have a worse common thread: a more intrusive role 14 Low pay for A plan to give Britain one of the world’s 20 Turnout highest minimum wages Election fatigue and a big gap in the 10 Immigration polls may persuade voters to stay The Tories’ plan to cut immigration by 15 The economy at home two-thirds would be highly damaging With a slowdown looming, the Tories have picked a good time for a vote 20 Ground troops 11 Education and mobility As party leaders fight for the airwaves, Ditching tuition fees and opening 16 their activists pound the ground grammar schools could help rich children Referendums on independence and at the expense of poor ones Brexit have caused a realignment that benefits the Conservatives 11 Tax Whoever wins the next election, taxes 17 are likely to go Yet another election will not help efforts to patch things up

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would each in their own way step back from the ideas that have made Britain prosper—its free markets, open borders and internationalism. They would junk a po- litical settlement that has lasted for nearly 40 years and influenced a generation of Western . Whether left or right prevails, the loser will be liberalism.

Labour, the Mr Corbyn poses as a radical but is the most conservative—and the most danger- ous—candidate of the lot. He wants to take the railways, water and postal service back into public ownership. He would resur- rect collective pay-bargaining and raise the minimum wage to the point where 60% of young workers’ salaries are set by the state. His tax plan takes aim at high earners and firms, who would behave in ways his costings ignore. University would be free, as it was until the 1990s—a vast subsidy for the middle class and a blow to the poor, more of whom have enrolled since tuition fees helped create more places. On Brexit, Labour sounds softer than the Tories but its policy comes to much the same. It would end free movement of people, precluding membership of the single market. Mr Corbyn is more relaxed than Mrs May about migration, which might open the door to a slightly better deal on trade. But his lifelong opposition to globalisation hardly makes him the man to negotiate one. No economic liberal, Mr Corbyn does not much value personal freedom either. An avowed human-rights campaigner, he has embraced left-wing tyrants such Our endorsement as Hugo Chávez and Fidel Castro (a “cham- pion of social justice”), who locked up op- Britain’s missing middle ponents and muzzled the press. Mr Corbyn has spent a career claiming to stand for the oppressed while backing oppressors.

Candidate of nowhere June 1st 2017 The Tories would be much better than The leaders of both main parties have turned away from a decades-old vision of Labour. But they, too, would raise the an open, liberal country drawbridge. Mrs May plans to leave the RITAIN last voted in a general election stagnated. Public services are stretched. EU’s single market, once cherished by To- Bjust two years ago. Back then, the coun- Political parties have responded in radi- ries as one of ’s greatest try was a bridge between the European cally different ways. All have replaced their achievements. Worse, she insists on cut- Union and Barack Obama’s America. Its leaders. has taken Labour ting net migration by nearly two-thirds. economy was on the mend after years of to the loony left, proposing the heaviest Brexit will make this grimly easier, since squeezed living standards. Scottish inde- tax burden since the second world war. Britain will offer fewer and worse jobs. pendence had just been ruled out. Labour’s The Conservative prime minister, Theresa Even then, she will not meet the target most controversial policy was a plan to cap May, promises a hard exit from the EU. The without starving the economy of the skills energy prices, denounced as “Marxist” by Liberal Democrats would go for a soft ver- it needs to prosper—something she ought the Tories, who went on to win. sion, or even reverse it. to know, having missed it for six years as Today Britain finds itself in a different The party leaders could hardly differ . era. The vote for Brexit has committed it more in their style and beliefs. And yet Her illiberal instincts go beyond her to leaving its biggest trading partner and a thread links the two possible winners suspicion of globally footloose “citizens of snuggling closer to others, including a of this election. Though they sit on differ- nowhere”. Like Mr Corbyn she proposes less-welcoming America. The economy ent points of the left-right spectrum, the new rights for workers, without considering has held up better than many feared but Tory and Labour leaders are united in their that it would make firms less likely to hire growth is slowing; investors are jittery. The desire to pull up Britain’s drawbridge to them in the first place. She wants to make union is fraying again. Real wages have the world. Both Mrs May and Mr Corbyn it harder for foreign companies to buy Brit- 1

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2 ish ones. Her woolly “industrial strategy” But against a backward-looking Labour took over. If Mrs May polls badly or messes seems to involve picking favoured industries Party and an inward-looking Tory party up Brexit, the Tories may split, too. Many and firms, as when unspecified “support about to compound its historic mistake moderate Conservative and Labour mps and assurances” were given to Nissan after over Brexit, they get our vote. could join a new liberal centre party—just the carmaker threatened to leave Britain Backing the open, free-market centre is as parts of the left and right have recently after Brexit. She has even adopted Labour’s not just directed towards this election. We in France. So consider a vote for the Lib “Marxist” policy of energy-price caps. know that this year the Lib Dems are going Dems as a down-payment for the future. And though she is in a different class nowhere. But the whirlwind unleashed by Our hope is that they become one element from Mr Corbyn, there are also doubts Brexit is unpredictable. Labour has been on of a party of the radical centre, essential about her leadership. She wanted the elec- the brink of breaking up since Mr Corbyn for a thriving, prosperous Britain. n tion campaign to establish her as a “” prime minister. It has done the opposite. In January we called her “The- resa Maybe” for her indecisiveness. Now the centrepiece of her manifesto, a plan to make the elderly pay more for social care, was reversed after just four days. Much else is vague: she leaves the door open to tax increases, without setting out a policy. She relies on a closed circle of advisers with an insular outlook and little sense of how the economy works. It does not bode well for the Brexit talks. A campaign meant to cement her authority feels like one in which she has been found out. It is a dismal choice for this newspaper, which sees little evidence of our classical, free-market liberal values in either of the main parties. We believe that, as it leaves the EU, Britain should remain open: to busi- ness, investment and people. Brexit will do least damage if seen as an embrace of the wider world, not simply a rejection of Europe. We want a government that maintains the closest ties with the EU while honouring the referendum, and that uses Brexit to reassert the freedom of Britain’s The background markets and society—the better to keep dy- namic firms and talented people around. The summer of discontent In their different ways, both Labour and the Tories fail this test. No party passes with flying colours. But the closest is the Liberal Democrats. Brexit is the main task of the next government and they want membership of the single June 1st 2017 market and free movement. (Their second British politics is being reshaped by the collapse of the neoliberal consensus referendum would probably come to noth- HE Germans have a word for it: Ge- circumstances. The next government will ing, as most voters are reconciled to leaving Tschichtsmüdigkeit, a weariness of his- also have to re-examine domestic policies the EU.) They are more honest than the To- tory. The British were weary enough when on everything from financial regulation to ries about the need to raise taxes for public Theresa May called a surprise general fisheries as ’ writ comes to its end. services; and more sensible than Labour, election on April 18th. It is just two years But there is more. For the past 40 years spreading the burden rather than leaning since the country’s previous general elec- Britain has been dominated by neoliberal- only on high-earners. Unlike Labour they tion, and less than a year since the divi- ism, a creed that sought to adapt some of would reverse the Tories’ most regressive sive referendum that saw it decide to quit the tenets of classical 19th-century liberal- welfare cuts. They are on the right side the EU; in 2014 a referendum in Scotland ism to a world in which the role of the state of other issues: for devolution of power also put the future of the had grown much larger. It emphasised the from London, reform of the voting system to the vote. A monumentally dispiriting virtues of rolling back that state through and the , and regulation of campaign has only deepened the weari- privatisation, deregulation and the reduc- markets for drugs and sex. ness. Tedious as it all is, though, history tion of taxes, particularly on the rich; of Like the other parties, they want to fid- is being made. embracing globalisation, particularly the dle with markets by, say, giving tenants Brexit is the obvious reason. Whether globalisation of finance; of controlling first dibs on buying their property. Their it is Theresa May, the Conservative in- inflation and balancing budgets; and of environmentalism is sometimes knee-jerk, cumbent, who started from a position of allowing creative destruction full rein. as in their opposition to new runways and strength but has campaigned poorly, or Jer- At this election, for the first time since fracking. The true liberals in the party jostle emy Corbyn, the left-wing Labour leader, the 1970s, that philosophy has no standard- with left-wingers, including , the winner will be forced to reshape Brit- bearer. Jeremy Corbyn loathed it through- who is leading them to a dreadful result. ain’s place in the world in highly adverse out its ascendancy. Mrs May launched her 1

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2 manifesto by attacking “the privileged tricity being rationed, and the “winter of few”, denouncing “rip-off energy prices” discontent” in 1979, when a range of public One-and-a-half horse race? 2 and proclaiming that “it’s time to remem- services were paralysed by industrial ac- Britain, average of polls, to May 29th, % ber the good that government can do.” tion, Butskellism passed over the horizon. 2015 EU referendum 2017 election Both Mr Corbyn and Mrs May feel like The second post-war landscape was election campaign campaign throwbacks to times before its ascendancy: that of neoliberalism. Margaret Thatcher 50 Mr Corbyn to the militant activism of the confronted the unions instead of negoti- 1970s and Mrs May to the constrained if ating with them, denounced “industrial Conservative comfortable conformity of the 1950s. But strategies” as nonsense and privatised 40 their antediluvian stances resonate. They three-quarters of Britain’s state-owned appear to address problems that neoliber- companies. She embraced globalisation, 30 alism allowed to fester, such as inequality then hardly a word: capital controls were and social disintegration—problems which abolished; the “Big Bang” re-established Labour explain, in part, why the country embarked London as the world’s financial centre; 20 on Brexit in the first place. and Britain led the reforms that created UKIP In the decades following the second Europe’s single market. 10 Lib Dem world war, the British political landscape These reforms were brought at a cost: Green was one of “Butskellism”—a term this unemployment topped 3m in the early ? newspaper contrived from the names 1980s (see chart 1) and many smokestack 0 R.A. Butler, a moderate Conservative, industries were reduced to ruins. But by 2015 2016 2017 and , a moderate Labour- the late 1980s there was also a palpable Sources: Britain Elects; The Economist ite, two supposedly opposed chancellors sense of a corner turned: the City boomed, Interactive: Economist.com/UKPollTracker17 who had much in common. Butskellism entrepreneurs such as Richard Branson rested on four pillars: Keynesian demand- thrived, the south-east prospered. Ailing as “picking winners”. In 1942 William Bev- management designed to avoid slumps; social democracies such as Sweden began eridge, a liberal academic, committed the a welfare state to provide people with a to look to Thatcher’s Britain as a model. government to slaying “five giant evils” combination of opportunities (though edu- and built a in the report that laid the foundations cation) and security (through health care broader programme of liberal modernisa- for the post-war welfare state. Mrs May’s and pensions); consensus between poli- tion on this landscape. Their “New Labour” manifesto evokes his spirit by referring to ticians, businesses (including many that pursued constitutional reforms in which “five giant challenges”: the economy, Brexit, were owned by the state) and trade unions; Mrs Thatcher had had no interest, made social divisions, an ageing society and tech- and an “industrial strategy” to shape the a point of using the proceeds of growth to nological change. “We do not believe in direction of the economy. compensate the losers, and embraced the untrammelled free markets,” it claims. “We The Butskellite economy grew rapidly EU. As Stewart Wood, a former adviser to reject the cult of selfish individualism. We (though not as rapidly as America, France Gordon Brown, puts it: “One of Margaret abhor social division, injustice, unfairness or Germany did). The welfare state suc- Thatcher’s great achievements was to turn and inequality.” ceeded in its basic aims—providing free a fundamentalist faith in free markets into health care and old-age pensions for eve- the hallmark of moderate for the After Butskell, after Blair rybody and free university education for next generation of leaders.” Manifestos are limited documents: in 1979 the brightest. But by the 1970s almost half One generation on, the landscape is the Conservatives’ manifesto provided of Britain’s national income was devoted changed again. The Conservative mani- hardly an inkling of the revolution to come. to public spending. Growth slowed; infla- festo reintroduces ideas that Margaret But they are still indicative. Nicholas Timo- tion soared. In 1976 Britain became the Thatcher regarded as beyond the : thy, Mrs May’s co-chief of staff and the first advanced country to go to the IMF for price controls for energy markets; more main author of the manifesto, wants to a loan. Between the three-day weeks of council houses; industrial policy of the sort update the party for the age of populism 1974, when a miners’ strike led to elec- that free-marketers reflexively denounce and economic stagnation. So where Mrs Thatcher, a former education secretary, of- fered opportunity, Mrs May, a former home Before and after Thatcher 1 secretary, offers security. Mrs Thatcher saw Britain aspirational as a way to ap- Inflation rate, % Unemployment rate, % peal to working-class voters. Mrs May’s 20 20 protective conservatism seeks to expand 15 15 the party base by shielding the just-about- 10 10 managing from global markets. Labour’s manifesto is even more hostile 5 5 to markets. It wants to take the railways 0 0 1970 75 80 85 90 95 2000 05 10 16 and electricity companies back into pub- lic ownership and give power back to the Government parliamentary majorities, at year end election leader change unions. It wants to restore the “basic princi- PM HEATH WILSON THATCHER MAJOR BLAIR CAMERON Lib Dem 200 ples” of the welfare state by abolishing the CALLAGHAN MAJOR BROWN coalition MAY fees for university students that Mr Blair 100 brought in, scrapping the private-finance + * *** 0 initiative with which Mr Brown was much – 50 taken and removing all internal markets 1970 75 80 85 90 95 2000 05 10 17† from the (NHS). Sources: Rallings and Thrasher; House of Commons; † The manifesto would have been redder “British Electoral Facts 1832-2006”; *Minority governments To June 8th yet in tooth and claw if Mr Corbyn had had 1

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2 his way. The MP for Islington North is argu- boasted 57 MPs then, they now have just the hearts and votes of a majority of the ably the most left-wing leader the party has eight. They are unlikely to add many on party’s members as well as of tens of thou- had. He is certainly more left-wing than June 8th, despite theirs being the only party sands of new “supporters” who, thanks to , the leader in 1980-83, who promising to try to soften Brexit and to offer a rule change Mr Miliband had favoured, never had any truck with Marxism. Mr the possibility of rejecting it. were allowed to vote in the leadership elec- Corbyn defied his party’s whip 428 times tion provided they contributed £3 ($4) to under Mr Blair and Mr Brown, opposing, Unforced errors party coffers. When his leadership was among other things, private-finance for the It would be wrong to see only an ideo- challenged after the Brexit referendum Mr NHS, anti-terrorist legislation and the inva- logical shift at play here; political misjudg- Corbyn could no longer get even 15% of sion of Iraq. His inner circle is even more ments played a big part in getting Britain the party’s MPs to nominate him. But the hard-line. John McDonnell, his shadow to its current impasse. When, having lost courts ruled that this did not preclude his chancellor, is an admirer not only of Marx the election, stepped down running, and he won again. He thus held but also of Lenin and Trotsky. as Labour leader in 2015, all candidates on to the leadership of his party despite Abandoned by the two main parties, to succeed him needed nominations from the fact that three-quarters of his colleagues neoliberalism has no redoubt elsewhere. 15% or more of the parliamentary party. in Parliament think that he is unfit for the After years in which it looked as if Britain’s Mr Corbyn would not have been able to job and many leading MPs refuse to serve two-party system was fragmenting, things surmount that barrier had it not been for in his . have gone into reverse. The two main par- some centre-right MPs feeling that, though Then there was Mr Cameron’s misjudg- ties currently have a combined share of he had no hope of winning, his candidacy ment. He believed that he could get the 80% of the polls, compared with just 67% would broaden the debate. Margaret Beck- Eurosceptic monkey off his back by propos- in the 2015 election. The Liberal Democrats ett, previously a caretaker leader of the ing a referendum which, if he remained have paid for the neoliberal enthusiasm party, said that she nominated him “so that in coalition, he would never be able to that took them into coalition with David the left would have some representation”. call and which, if the Conservatives won Cameron’s Conservatives in 2010; having Given this opportunity, Mr Corbyn won a majority in Parliament, he would easily win. The British—and global—establish- ments were united in favour of Remain (Mrs May was among them, though the effort she put into campaigning for the cause was studiously slight). Eurosceptic ranks were thick with what Mr Cameron described as “swivel-eyed” lunatics. The campaign proved Mr Cameron’s assessment wrong. Having earlier said he would be happy to leave the eu if it were not reformed, his claims that Britain had to remain rang hollow. Mr Corbyn, who like most of the Labour left has been deeply Eurosceptic in his time, campaigned for Remain with less vigour than any other Labour leader since Michael Foot would have. A group of canny activists led by , and seized control of the Leave campaign and sought to marginalise both UKIP’s —whose anti-im- migrant populism turned many voters off, but whose supporters would regardless—and old-school Tory Euroscep- tics like . Instead they kept the focus on more plausible voices such as those of and . Mr Hannan argues that, had Down- ing Street been able to frame the debate as a choice between Mr Cameron and Mr Farage, Mr Cameron would have won at a walk. Instead he lost. In a way, though, he succeeded in his original aim. The Tories had been split over Europe since the mid-1980s; the division helped topple Mrs Thatcher, hobbled her successor, , and weakened op- position to New Labour. Now the breach is mended: the Eurosceptics won. And this has provided an electoral bonus. Tories who abandoned the party for UKIP can now return—and Labour voters who went for She was the future once UKIP, or voted Leave in the referendum, 1

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2 seem winnable, too (see chart 3). The To- But the financial crisis did not just en- public against globalisation. Immigration ries have calculated that if they could add trench distrust and anger. It also laid bare is a more emotional subject than other 80% of the votes UKIP got in 2015 to their longer-term problems in the economy. Brit- forms of free movement because it in- own tally from that year, their working ain’s flexible labour market has been good volves issues of culture and competition majority in Parliament, currently 17 seats, at generating jobs. That is one reason the for resources such as school and hospital would be over 100. They have campaigned admission of eastern European countries places. It also divides opinion on class vigorously in Labour strongholds in the such as Poland to the EU led to a surge lines: richer Britons are more likely to re- Midlands and the North that voted for in immigrants in the mid-2000s, one that gard immigration as a good thing; poorer Brexit: Mrs May launched her manifesto in New Labour welcomed; concerns over Britons to see them as competitors for jobs the Yorkshire town of Halifax, where 56% their presence was one of the factors that and state resources. voted Leave and Labour’s paliamentary delivered a Leave vote at the referendum. That division was made more poisonous majority is under 1,000. But despite the influx, the unemployment by the fact that the elite did very well in the rate is one of the lowest in Europe. neoliberal years. In 1980 the average CEO The darkness drops again If the neoliberal dispensation was good of a company on the FTSE All Share index The appearance of Mr Corbyn’s name on at producing jobs, though, it was no great earned 25 times more than the average labour’s leadership ballot allowed thou- help in guaranteeing their quality. Almost employee. In 2016 the bosses earned 130 sands of angry people to vote for a leader a million Britons are on “zero-hours” con- times more. Between 2000 and 2008 the who broke with the past. Mr Cameron’s tracts that provide no assured revenue, index fell by 30% but the pay for the CEOs decision to hold a referendum allowed mil- up from 108,000 in 2004. Britons work running the firms on the index rose by 80%. lions of people to express their frustration longer hours than their French and Ger- Privatisation has fed resentment too. with the status quo. And these angry deci- man counterparts, and, in the south-east, Labour’s promise to re-nationalise the sions have proved to be mutually reinforc- spend more time and more money getting railways, which would have been unthink- ing. Mrs May’s decision to accept the result to work. Britain’s productivity (output per able ten years ago, is popular today: thank of the Brexit vote has produced a defini- hour worked) briefly exceeded the EU-15 high fares and private profit. The bits of tively post-Cameron Conservative party; average in the early 2000s but now stands the public sector that stayed public did the only Tory voice of note raised against at just 90% of the average. The OECD notes pretty well by their overseers, too. Mark her is that of , once an that a higher proportion of British 18- to Thompson, then the director-general of impeccably neoliberal chancellor, now the 24-year-olds suffer from low literacy and the BBC, saw his pay soar from £609,000 editor of London’s local paper, the Evening numeracy than their equivalents in France, in 2005-06 to £788,000 the next year and Standard. Mr Corbyn’s relatively successful Germany, or Spain. £834,000 the year after that. The average campaign has demonstrated that espous- Britain also has the most capital-centric pay of a university vice-chancellor is now ing socialist opinions is not necessarily the economy of any major country apart from more than a quarter of a million pounds. kiss of death. South Korea. Per-person GDP in London is Many British politicians also did very well, The anger that turned those mistakes almost two-thirds higher than the national and not just through their expenses. Politi- into a seismic shift is itself grounded in the average; it is almost two-and-a-half times cians such as Mr Blair, Peter Mandelson failures of neoliberalism. The biggest factor higher than in Wales. The house-price-to- and Mr Osborne have made millions by was the 2008 global financial crisis. It hit earnings ratio in London has risen from offering advice to banks, making speeches Britain particularly hard because financial seven times average earnings in the early and otherwise transforming themselves services play an outsized role in the coun- 2000s to 13 times today, so that London from gamekeepers into poachers. try’s economy, generating 8% of its GDP, and vies with New York and Tokyo as the most Mr Carswell, who having left first the because of its “light touch” regulation. The expensive place to live. The capital is also Conservatives and then UKIP is now retir- crisis made Britons significantly poorer: the most expensive place in the world for ing from Parliament, goes too far when British workers saw their wages (adjusted startups to rent offices. he says that the problem with today’s for inflation) fall by 10% in 2008-14, and It was against this background that im- neoliberals is that they “are on the side are unlikely to see them reach pre-crisis migration came to play its pivotal role in of Davos Man, not the demos”. Succes- levels until at least 2020. It played havoc turning significant sections of the British sive politicians have made serious attempts with the public finances: faced with large to address Britain’s over-centralisation, for deficits the coalition government chose to example. Mr Blair and Mr Brown allowed cut back on public spending. A Brexit bonus 3 Scotland and Wales to vote on devolution. The crisis also undermined the public’s Britain, 2017 voting intention Mr Cameron and Mr Osborne created six faith in their rulers. That faith had already by vote in 2015 election, % powerful regional mayors, including ones taken some knocks. Mr Blair’s decision to 2015 vote 2017 intention for Britain’s second and third cities, Bir- back George Bush in removing Saddam mingham and . But this return Hussein from power in 2003 ended up of control to the people has proved insuf- doing much to discredit him, especially in Conservative Where 45 ficient. Many wanted more, and believed UKIP votes the eyes of his own party. The only Labour are going, % that by voting to leave the EU they would prime minister ever to win three elections 46 get it, particularly when it came to borders in a row became a pariah in his own coun- and immigration. In doing so they changed try. More parochially, in 2009 the Daily Tel- things profoundly. A poor government can egraph revealed that MPs routinely abused Labour be voted out. Misguided plebiscites are not their expenses to do up homes that they 34 so easily reversed. sold on at a profit, as well as for sundry 24 Whether that attempt to seize control other ill-judged and absurd outlays such as UKIP 3 leads to the creation of a plausible new 8 the renovation of moats and the housing 22 political landscape, not just the levelling of ducks. Six cabinet ministers resigned, Lib Dem 4 of the old one, depends to some extent 9 several MPs ended up in prison and the 6 on the result of the election. A devastating Source: ICM poll, May 30th 2017 other political class was tarnished defeat for Mr Corbyn might allow moder-

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2 ate Labour MPs to reassert control over the plunged the Tory campaign into chaos is taming the populist revolution by co- party, sparking a centrist revival. A big win by adding an ill-thought-out measure opting it; in fact, she may end up hostage for Mrs May might allow her to negotiate a to oblige elderly people to pay for their to a revolution already in retreat. softer Brexit than Eurosceptics like Mr Red- social care without putting a cap on the The third is Brexit itself. Negotiating it is wood want to see. But neither is that likely. amount that they would spend. Labour’s likely to prove all-consuming; policymak- manifesto is a compromise between what ers will have no energy left over for serious Slouching towards Mr Miliband offered two years ago and attempts to tackle problems such as poor The main opposition to the left in the what Mr Corbyn wants, with a profusion productivity growth. And all the while Labour Party comes from the old right, of specific proposals that seeks to distract Brexit will be hurting the economy. Even led by Tom Watson, Mr Corbyn’s deputy, from its fundamental flaws. Brexiteers concede that Britain will suf- not from Blairites; the right has contempt The second is that the populist wave has fer short-term shocks as it renegotiates its for Mr Corbyn because of his havering broken badly for Britain. In the post-war relationship with its single biggest market. on the IRA and Hamas and his long his- era, and again in the 1980s, Britain was in Most independent experts predict long- tory of rebellion, not because he seeks to the forefront of a worldwide revolution. term harm as well. According to the most nationalise industries. Mrs May, neither The Beveridge report was translated into recent estimates from the Centre for Eco- easy to read nor very resolute, might just 22 languages (two German copies dropped nomic Performance at the London School as likely use a big victory as proof that she by the RAF were found in Hitler’s bunker). of Economics, a hard Brexit would reduce has public support to negotiate the hardest Mrs Thatcher’s agenda of deregulation and GDP per head by 2.6% over ten years, while of Brexits. Alternatively, the weakness she privatisation found imitators across the a softer Swiss- or Norwegian-style Brexit has shown in the campaign might yet see world: between 1985 and 2000 western would cut it by 1.3%. her deposed if colleagues decide the nego- European governments sold off some The result is likely to be a partial reprise tiations are going in the wrong direction. $100bn-worth of state assets. of the 1970s. Politics will be paralysed— Beyond this, there are three reasons for Today Britain is out on a limb. Donald this time by negotiating Brexit rather than thinking that it will be very hard to fashion Trump, the only major figure overseas to fights with unions. The economy will stag- a new political landscape either quickly have exalted in the Brexit result, is erratic, nate thanks to a mixture of uncertainty or well. The first is a lack of preparatory crisis-prone and toxic. and business flight. Public services will spadework. Beveridge published his out- won the French presidency by promising be squeezed. The roiling discontent that line of the welfare state in 1942; Thatcher- to embrace a Blairite mixture of liberal re- produced Brexit will find new targets. In ite think-tanks busied themselves drafting forms, including deregulation, and cosmo- the 1970s, though, Britain edged its way blueprints for privatisation throughout the politanism. looks as if she towards solving the problems of its former 1970s. Today’s populist conservatism looks is going to win a third term easily. Some dispensation. It is much harder to see it amateurish and improvised: Mr Timothy Conservatives have argued that Mrs May doing the same this time round. n

Really?

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as the deficit has fallen, so has its political salience. Yet given the risks associated with Brexit, and fears of a possible future reces- sion or another market crash, a continuing large deficit and a public debt of 90% of GDP ought to be of greater concern than they are. A second is how little appetite there is for cutting taxes, rolling back regulation and lightening burdens on business. All three parties seem, instead, to want to increase the state’s role in the economy. None of the three leaders seems to be a true eco- nomic liberal, including the nominally lib- eral Tim Farron. They appear to share the notion that markets need more curbs, not more freedoms. As one observer puts it, this week’s manifestos show that all have, to some degree, reverted to a pre-Thatcher way of thinking about the economy and free markets. This is most obvious in the case of Jer- emy Corbyn, Labour’s leader. His manifesto does not just propose a lot more spend- ing, but also an extensive programme of renationalisation, including Royal Mail, the railways and the water companies. For all Labour’s insistence on fiscal responsibil- ity, there is little sign of how to pay for all this: a current budget balance is not a budget balance, and there are good reasons to question the revenues likely to be gen- erated from higher income and corporate taxes. Labour also proposes new rights for workers and trade unions and measures to Election manifestos curb top salaries, including an “excessive pay levy” on companies that have very The state is back highly paid staff. This is the most left-wing manifesto that Labour has proposed since Michael Foot’s notorious “longest suicide note” of 1983, even if many details are less loony than May 20th 2017 then: no import or capital controls, for The three main parties are proposing very different policies. Yet they have a instance. Oddly for a leader whose main common thread: a more intrusive role for government interest is foreign affairs, Mr Corbyn is strik- S THE old saw has it, nobody reads par- lock” for state pensions. The Lib Dems are in ingly moderate in this area. His manifesto Aty manifestos. Most voters have made the middle: more spending than the Tories, pledges to maintain the nuclear deterrent, up their minds, and undecideds choose on less than Labour. supports NATO and promises to stick to the the basis of leadership, not election pledges. Policy differences exist also over educa- target of spending 2% of GDP on defence, Yet manifestos matter, for two reasons. One tion, health and social care (for which the all policies that contradict what Mr Corbyn is that they count in government, especially Tories propose to make the rich elderly pay himself has stood for in the past. when, as now, there is no majority in the more), as well as on Britain’s exit from the Yet it is Theresa May’s manifesto that is House of Lords (by convention, the Lords . Here Labour makes its most interesting, and not just because she do not oppose manifesto commitments). priority the economy and jobs. The Tories’ is on course for victory on June 8th. For it The other is that manifestos are a guide to emphasis is on controlling immigration and reveals a Tory leader whose instincts are parties’ philosophy. escaping the European Court of Justice. And more interventionist than any predecessor The first impression from this week’s La- the central plank of the Lib Dem manifesto since in 1965-75. To deal with bour, Liberal Democrat and Conservative is a second referendum on a Brexit deal, complaints about energy prices, she joins manifestos (the third emerged as we went with continuing EU membership as a clear Labour in proposing price caps. She prom- to press) is of clear blue water. Labour is alternative. In this election, in short, voters ises a new generation of council houses, proposing big spending increases, financed can hardly complain that they do not face although she is cagey about how to finance mainly by sharp rises in taxes on compa- genuine choices. it. She also backs a higher minimum wage, nies and the rich (defined as earning above Yet, beyond the headlines, what emerges albeit smaller than Labour’s. £80,000, or $104,000, a year). The Tories are more strikingly are the common themes. Mrs May is promising not just to retain more frugal, though they are dumping their One is the absence of much mention of the all EU rights for workers after Brexit, but to commitment not to raise income tax and budget deficit. Torsten Bell of the Resolution add to them. Her manifesto includes sev- national insurance contributions; they are Foundation, a think-tank, points out that in eral digs at business, including demands for also alone in not guaranteeing the “triple 2010 and 2015 this was the central issue; more transparency on executive pay and 1

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2 some form of worker representation on ternalism, no longer aiming to reduce the will be tricky. Mrs May now plans to boards. As Paul Johnson of the Institute for reach of the state but instead pursuing an charge firms higher fees for hiring skilled Fiscal Studies, another think-tank, notes, interventionist strategy. foreigners. Not only would this hurt busi- the biggest example of her interference What is oddest about this is not its break nesses, it would make it harder to secure in the market concerns immigration. She from the past, but its timing in relation post-Brexit trade deals. India, for example, restates the target of cutting the net figure to Brexit. Mrs May is pursuing a “hard” has already made clear that any trade below 100,000, from almost three times Brexit that involves leaving the EU’s single agreement would have to include some that today, and she makes clear that the market. If business is to thrive and new concessions on migration. cost of policing lower EU migration must investment to be attracted in the uncertain Why stick to this foolish target? Rob fall on employers. world that this will create, a more logical Ford of the University of Manchester sug- In part what Mrs May is doing is merely move would be to reduce intervention, cut gests three reasons. First, Mrs May might tactical. On Brexit and immigration, she red tape and lower taxes. To choose this worry that abandoning the commitment wants to mop up voters who formerly moment to move closer to a continental could jeopardise her chances of hoover- backed the UK Independence Party. On European model of more regulated markets ing up the votes of one-time supporters social and employment policies, she hopes is not just perverse but risky. No wonder of the anti-immigration UK Independence to steal Labour moderates. Judging by the business is lukewarm about Mrs May’s Party. Second, voters do not trust the gov- polls, she is doing well on both fronts. Yet manifesto—and about its own prospects ernment when it comes to immigration her manifesto also reveals a new Tory pa- in a post-Brexit Britain. n (two-thirds think it unlikely that the To- ries would reduce net migration by very much). The prime minister may worry Immigration that, implausible as her goal seems, drop- ping it would erode that trust still further. A promise worth breaking Third, Mrs May has invested time and la- bour in the issue, having grappled with it for six years as home secretary. A fourth possibility is that she envis- ages a deep post-Brexit recession, which would cause immigration to dry up. May 20th 2017 The target might be fudged. Tailored The Tories’ plan to cut immigration by two-thirds would be highly damaging visa programmes for particular industries HE uncertainty created by Brexit in 2010 in an effort to win an election. The could exclude crowds of migrants from Tmakes it hard to draw up concrete ploy worked—but he got nowhere near the figures, if they were rejigged to look policies in many areas. But Britain’s im- meeting the target. Mrs May is only slight- only at long-term stayers. Four-fifths of minent departure from the European ly more likely to succeed. Until now the Britons would be happy for doctors from Union has changed the context for one Conservatives have been able to blame the EU to be given special visas, accord- issue in particular: immigration. Labour’s the EU, whose rules on free movement ing to an Ipsos MORI poll. (Only two-fifths manifesto is cautiously vague, promising mean that much immigration to Britain would award them to bankers.) But with “fair rules” and reasonable management. is beyond the control of the government. the government apparently unwilling to But Theresa May has reiterated one long- After Brexit, cutting migration from Eu- discount foreign students from the sta- running Conservative promise: to bring rope will be possible. But even if Britain tistics, despite the public’s affection for net migration (immigration minus emigra- banned all immigration from the EU— them, carve-outs for particular industries tion) to below 100,000 a year. This com- which would be ruinous—net migration seem unlikely. mitment, and the party’s ongoing failure would remain above 100,000 (see chart). If the prime minister fails on her pledge, to fulfil it, has hurt the Tories in the past. Cutting the numbers from the rest of trust in her and her government could That makes their dogged adherence to it the world has proved difficult. Recent erode. Mrs May’s claims to have got the all the stranger. court rulings mean that tightening the best Brexit deal might be met with scepti- introduced the pledge restrictions on family visas and refugees cism from Brexiteers, many of whom see reducing migration as the main reason for leaving the EU. Disappointed former UKIP Who goes there? voters could even be seduced by nastier Britain, long-term international net migration*, ’000 political forces. By nationality By reason for entry Yet the graver danger is that Mrs May 400 100 succeeds. The economic damage would Taking up EU EU2 a job Non-EU 50 be considerable, not least in the impact EU8† 300 0 on the public finances. The current mi- gration flow works in Britain’s favour. EU15 100 200 Joining Non-EU The country exports expensive pension- family 50 ers and imports mostly young, healthy, EU 100 Non-EU 0 taxpaying foreigners. The government’s + 200 fiscal watchdog reckons that by the mid- 0 Studying 150 2060s, with net migration of around British – Non-EU 100,000 public debt would be about 30 100 100 percentage points higher as a proportion EU 50 of GDP than if that number were 200,000. 200 0 Of all the prime minister’s promises, Brit- 2006 08 10 12 14 16 2006 08 10 12 14 16 ons must hope that her vow to cut im- Source: ONS *Twelve-month moving rate †Plus Cyprus and Malta migration is one she is willing to break. n

11 The Economist May 2017 BRITAIN’S CHOICE

Education and mobility There are ways to increase the number of poor pupils at grammar schools: from Old school creating entrance tests that are harder to prepare for to mandating a certain num- ber of places for children on free school meals. But those children who failed to make the cut would still do worse than May 20th 2017 they would under a comprehensive sys- Ditching tuition fees and opening grammar schools could help rich children at the tem. Studies have demonstrated that se- expense of poor ones lection at 11 does not improve overall re- HERESA MAY and Jeremy Corbyn do poor students has narrowed since the gov- sults: it merely changes the distribution of Tnot have much in common. Yet both ernment tripled the amount that universi- good grades. are offering education policies focused on ties were allowed to charge in 2012. Both Mrs May and Mr Corbyn say that improving the chances of children from Shifting funding from the state to stu- a desire to improve social mobility lies at poor families. Mr Corbyn’s Labour Party dents enabled the government to remove the heart of their education policies. In manifesto includes a promise to abolish limits on the numbers universities could fact, they risk doing just the opposite. n tuition fees, levied by most universities at admit. The resulting increase particularly £9,000 ($11,600) a year. Mrs May plans to benefited poor students. In Scotland, introduce new grammar schools, which where tuition is free and a cap on student Tax are allowed to select pupils at 11 on the numbers remains, the growth in univer- basis of scholarly talent. sity attendance in deprived areas has Let me tell you Both policies will win votes: polls been slower. In England loans are avail- suggest that people quite like grammar able to pay for tuition and are paid back how it will be schools and greatly dislike tuition fees. only once a graduate earns more than That is partly because both ideas hark £21,000 a year. Since outstanding debts May 20th 2017 back to a post-war golden age of social are forgotten after 30 years, almost three- Whoever wins the next election, taxes mobility, in which bright, poor children quarters of graduates will probably never are likely to go up could take the 11-plus entrance exam to fully repay their loan. Thus the abolition win entry to a good school, before pro- of tuition fees would mostly benefit high O FINANCE the many costly prom- ceeding to a free university and, later, a earners. The Institute for Fiscal Studies, Tises in its manifesto the Labour Party career in business, government or science. a think-tank, estimates the policy would would need to increase taxes significantly. Yet, in truth, the post-war years of up- cost £8bn a year. It has promised a steep rise in corpora- ward mobility had more to do with the Likewise, children from well-off fami- tion tax and a higher rate of income tax changing structure of the labour market lies are the main beneficiaries of Britain’s for those earning more than £80,000 than educational institutions. And the 163 existing grammar schools. According ($104,000) a year. The Liberal Democrats evidence suggests that both policies will to research published last year by the Edu- want to add one percentage point to each probably fail to improve social mobility. cation Policy Institute, another think-tank, band of income tax to pay for extra spend- Take fees first. The Labour manifesto children at grammars score one-third of a ing on health care. argues that there “is a real fear that stu- grade higher in each of their GCSE exams, The Conservatives, by contrast, like to dents are being priced out of university which are taken at 16, than do those at portray themselves as the party of low education”, but provides flimsy evidence comprehensive schools. Yet few poor chil- taxes. On the campaign trail Theresa May to support the claim. Although, as it notes, dren pass the entrance tests: just 2.5% of has talked of her low-tax “instinct”. But the number of students has fallen this children at existing grammars receive free she has left the door open to higher taxes, year, that reflects a fall in the 18-year-old school meals (a proxy for poverty), com- in contrast to her party’s promise in 2015 population, Brexit’s deterrence of foreign pared with 8.9% at nearby state schools. not to increase income tax, VAT or nation- applicants and the abolition of bursa- And those at comprehensive schools near al insurance contributions (a payroll tax ries for those on nursing and midwifery grammars do worse than their peers else- which , the chancellor courses. The reality is that the gap in high- where, partly because grammars attract of the exchequer, is keen to raise). er education attendance between rich and the best teachers. Regardless of the parties’ manifestos, a look at Britain’s accounts makes one thing clear: whoever wins on June 8th and whatever promises they make now, in the coming years the tax burden is likely to rise to its highest level in decades. When the Conservatives came to pow- er in coalition with the Lib Dems in 2010, the government was running a budget deficit worth 10% of GDP. As ministers went about reducing the deficit in the parliament of 2010-15, most of the adjust- ment was borne by cuts to public spend- ing rather than by tax rises. A number of departments, such as health, education and international devel- opment, have been largely spared the axe. But others, such as work-and-pensions and Going up in the world transport, saw real-terms cuts of more than 1 12 The Economist May 2017 BRITAIN’S CHOICE

Nationalising industries knew that they had no chance of holding Declare the pennies on your eyes on to them, they would surely curtail in- Britain, total government spending and receipts Ministers as vestment. Fiscal years ending March 31st, % of GDP More costly than the initial price of 50 managers buying back these industries would be the FORECAST long-term damage done to them by plac- 45 ing them back under public management. Spending May 18th 2017 National ownership in the past was char- 40 A high short-term price and higher long- acterised by chronic underinvestment and term cost inefficiency. A paper from the World Bank 35 ABOUR’S manifesto is as long as it is pointed out that investment flooded into Receipts Lambitious. Over 123 pages of some- Britain’s water industry after it was priva- 30 times dense prose, the party promises to tised in 1989. Even on the railways, which 1979 85 90 95 2000 05 10 15 18 “upgrade” the economy and “transform passengers readily complain about, satis- our energy systems”. This would involve faction is higher than in most of Europe. Source: OBR the nationalisation of the water system, Yet Britain’s utilities are far from perfect. the energy-supply network, Royal Mail On international rankings of infrastruc- 2 a third in 2010-16. Real spending on public and the railways. Britain’s infrastructure is ture quality the country has slipped in services has fallen by 10% since 2009-10, indeed due for an upgrade. But Labour’s recent years. Energy firms take advantage the longest and biggest fall in spending plans would be costly—both in the short of consumers’ unwillingness to switch on record. This brought the budget deficit and long term. supplier, by charging steep prices to their down to 4% of GDP in 2015-16. The first challenge would be to move most loyal customers. Water bills have Departments can make efficiency im- privately held firms back into public own- risen sharply in real terms since privatisa- provements up to a point, but eventually ership. The government might ultimately tion, in part to pay for higher investment. ever-smaller budgets make it difficult to need to fork out over £60bn ($78bn) for A number of factors make Britain’s util- provide core services. From prisons to the the water industry, a similar amount for ities work less well than they could. The National Health Service, measures of per- National Grid (which runs electricity- and current system, where a “super-regulator” formance started to go south from around gas-transmission networks) and £5bn or (the Competition and Markets Authority) 2014, according to a recent report from the so for Royal Mail. Borrowing such large shares competences with sectoral regula- Institute for Government, a think-tank. amounts would put upward pressure on tors (such as Ofgem and Ofwat), creates The rate of child poverty, which fell during government-bond yields, which would confusion. Regulations are complex; util- the 2000s, is now rising sharply, in part be- ripple through the economy into mortgag- ity firms hire senior staff less for their abil- cause of big cuts in working-age benefits. es and corporate-borrowing costs. ity to think creatively and more because Since the election in 2015 the govern- Nationalising the railways, by contrast, they can navigate the rules. ment has subtly adopted a new approach might not be especially costly. Network There is a need for fresh thinking on to austerity: less emphasis on spending Rail, which manages the track, is already how to solve these problems. But Labour cuts, more on tax rises. In the average in public hands. The train companies has simply exhumed policies that were budget or autumn statement since then, have time-limited franchises. Once these buried decades ago for the good reason the government has called for tax rises have expired, the government could take that they did not work. The party’s leader, four times as big as the average in the par- back control at little cost. However, many Jeremy Corbyn, is often described as a liament of 2010-15. Granted, the personal of the franchises do not expire until the radical. In fact his programme is in many allowance for income tax has risen. The 2020s. And if the operating companies ways a conservative manifesto. n headline rate of corporation tax has been cut. Yet increases in less-noticed charges such as environmental taxes, stamp duty (a levy on property transactions) and insurance-premium tax (levied on every- thing from holiday to vehicle insurance) have more than compensated. Mr Hammond is fast gaining a reputa- tion as a tax-grabber. In his first budget in March the chancellor pencilled in a reduc- tion in the tax-free allowance for dividend income from £5,000 to £2,000. He also proposed an increase in the national-in- surance contributions paid by the self-em- ployed—though this was hastily, and em- barrassingly, withdrawn after an outcry from newspapers and Tory . In all, following recent revisions to offi- cial economic forecasts, it is now expected that in 2018-19 the tax burden, expressed as a percentage of GDP, will be at its high- est level since the mid-1980s. Mrs May’s “instinct” may well be to lower taxes, but she cannot help being bound by Britain’s unforgiving fiscal arithmetic. n Privatised Pat and his black and white fat cat

13 The Economist May 2017 BRITAIN’S CHOICE

luck. A sprightly person who died sudden- care. The manifesto is silent on plans for ly might be able to pass on millions, since income tax (most people suspect that in- their care costs would be zero. Someone creases are on the way). And there is no unlucky enough to endure a long illness acknowledgment that the pledge to cut with complex, expensive needs could lose net migration by nearly two-thirds would everything except £100,000. For a govern- have big fiscal costs. It is a blank cheque ment that has resisted raising inheritance from a party in little doubt that the public tax, this was a strange inconsistency. will sign it. n Mrs May’s emergency “clarification” helps fend off criticism of a health lottery. The new plan adopts the recommenda- Welfare tion of a review in 2011 by Sir to introduce a cap on how much Money where a person pays for care. (The manifesto had dismissed his proposals as “mostly your mouth is benefit[ing] a small number of wealthier people”.) Sir Andrew suggested a cap of JUNE 3rd 2017 around £40,000 in today’s prices. Mrs Britain’s poor face more painful benefit May has not specified a level. cuts whoever wins on June 8th The higher the cap, the less the state will have to fork out. Sir Andrew’s pro- ABOUR and the Tories do not agree posal might have cost about £2bn a year. Lon much, but they both recognise that Social care George Osborne, the previous chancellor, Britons feel squeezed. Average real wages had promised to implement a £72,000 cap are lower than before the financial crisis The four-day from 2020, at a cost of around half that. of 2008-09. Perhaps a million people, in- In an era of squeezed public spending the cluding nurses and teachers, have drawn manifesto temptation will be to raise the cap to an on food banks in the past year. Theresa even higher level. May, the prime minister, wants to help “or- The introduction of a cap not only pro- dinary working families” with caps on en- May 27th 2017 tects the unlucky few from exorbitant care ergy prices. Jeremy Corbyn, Labour’s lead- A magnificent U-turn raises questions costs. It also limits the liabilities of private er, talks of policies “for the many, not the about Tory competence insurers, making it more attractive for few” and promises a £10 ($13) minimum OTHING has changed. Nothing them to cover social care. At present, the wage. Yet since neither party breaks from “Nhas changed!” insisted Theresa market for social-care insurance is tiny. If it the regressive changes to benefits policy May. But it had. Four days after the launch were to develop, elderly folk would worry that are in the pipeline, the poorest Brit- of the Conservatives’ manifesto on May less about funding their care costs out of ons seem certain to suffer big income cuts. 18th, the prime minister reversed its sig- their estate. Britain’s welfare state has been on a nature policy, a proposed reform of the Yet there is reason to be sceptical that diet for some time. As the coalition gov- funding system for social care for the el- such a market will bloom. British insur- ernment of 2010-15 set about reducing the derly, which had come to be known as the ance companies have watched American budget deficit, welfare spending fell by “dementia tax”. Mrs May insisted that the firms get their fingers burnt as conditions one percentage point of GDP, with work- change was merely a clarification. But Sir like dementia have become more com- ing-age families bearing the brunt. The re- David Butler, a nonagenarian psepholo- mon. Despite the ageing population, by forms squeezed the incomes of the poor, gist at Oxford University, noted on 2014 sales of long-term care insurance in yet falling unemployment cushioned the that in the 20 general-election campaigns America were two-thirds lower than they b l ow. he has followed, “I can’t remember a had been in the early 2000s. It is also an Since 2015, however, the Tories have U-turn on this scale.” The about-face is open question whether, under the new turned a hard-nosed welfare policy into a welcome, but leaves the social-care sys- rules, elderly Britons would be all that punitive one. George Osborne, the former tem underfunded and has fed a growing interested in private insurance. With the chancellor, used cuts in working-age ben- 1 perception that the manifesto was not cost of care to be capped and no one thought through. needing to pay anything until they die, The Tories’ original plan was to intro- would many bother taking out a policy? Welfare or unfair? duce a new funding formula for social Following the tweak, the Conserva- Britain, long-run change in net income caused care, whereby an elderly person would tives’ plan for social care looks similar by planned personal tax and benefit measures on their death be liable for all of their care to what was already legislated for before By income decile, % costs, until only £100,000 ($130,000) of the manifesto was launched, points out 2 Liberal Democrat + their estate remained. (The state would Sir Andrew: a cap on costs, plus a means 0 cover any further costs.) That is higher test. This does little to address the fund- – 2 than the existing threshold, but includes ing shortfall faced by social care. Between Labour the value of the person’s home, which 2009 and 2019, funding per person is 4 the existing means-test does not for most expected to shrink by around 5% in real 6 people. terms. Conservative The policy was not expected to raise The social-care proposal is not the only 8 much money, but it was progressive: part of the manifesto which looks a bit 10 wealthy oldies would end up contributing half-baked. There is no detail on the ex- 12345678910 most. It earned its unfortunate nickname tent of proposed cuts to winter-fuel allow- Poorest Income deciles Richest because it introduced a big dollop of blind ance, which are supposed to fund social Source: IFS

14 The Economist May 2017 THE BREXIT BRIEFS

2 efits as a way to balance the books, plan- ning to reduce the overall bill by £12bn. A four-year cash-terms freeze on most ben- efits began in April last year. That policy was announced when inflation was close to zero. Now it is nearing 3%, the purchas- ing power of everything from tax credits (top-ups for low-paid folk) to housing ben- efit is falling. Philip Hammond, Mr Osborne’s succes- sor, has pared back the deepest cuts. He re- duced the “taper rate” of , an all-purpose benefit, which means that as people earn more they lose their ben- efits less quickly. But the direction of travel is the same. In November the government lowered to £20,000 (or £23,000 in London) the ceiling on what a workless household could claim in benefits each year. The welfare reforms are bad news for the 50%-plus of families in Britain that receive income from at least one benefit. The Institute for Fiscal Studies, a think- tank, reckons that the Tories’ plans will reduce the net incomes of households in Low pay the bottom income decile by a tenth. The incomes of working-age folk with chil- Min to the max dren in the bottom decile could end up fully 15% lower. The unemployment rate, at 4.6%, cannot fall much further, so the labour market will not offset the effects of these welfare changes, as it did in 2010-15. april 29th 2017 And there is little sign that cuts to in-work A plan to give Britain one of the world’s highest minimum wages benefits, such as tax credits, prompt em- ployers to bump up wages instead. OST Britons have not had a decent joblessness to rise by much. As the chart Labour says it is offering a radical alter- Mpay rise in years, but the people (overleaf) suggests, low-paid workers native, but the distributional impact of its of West Somerset have done better than have benefited. Even those earning above tax-and-benefits policy is similar to the To- most. Since introducing the “national liv- the minimum have enjoyed better pay. ries’. True, it plans to raise income tax for ing wage” last April the government has “After [the minimum wage] went up, it high earners. Yet Labour has pencilled in increased minimum hourly pay for the was snapping at my heels, so I asked for a only £4.5bn or so more for welfare. It says over-25s from £6.70 ($8.60) to £7.50, a steep raise,” says Harriet, a council administra- cancelling the benefits freeze entirely is rise by historical standards. By 2020 it is tor in West Somerset. She got one. unaffordable, although it has found about due to reach about £9. A fifth of employ- At a vintage shop selling starchy nap- £10bn to remove university-tuition fees, a ees in West Somerset are paid the mini- kins and Victorian marmalade jars, the policy that heavily benefits the better-off. mum, a greater share than in any other lo- owner says her bottom line has not been A rising minimum wage, whether fixed cal authority (and compared with just one affected much by the minimum wage so by the Tories at 60% of the median or La- in 20 in London). Butlins, a holiday resort far. Alex de Mendoza of the local cham- bour’s leap to £10 an hour, is not much there, is recruiting heavily, and many of ber of commerce says that few local firms help, either. Unlike tax credits, where the its vacancies—from kitchen porter to life- complain about it (they are more con- state bears the cost, a higher minimum guard—offer the minimum rate. Last year cerned about business rates). Some have wage is likely to lead to higher unemploy- average pay in West Somerset rose by 5%. cut their employees’ perks in order to save ment, which would disproportionately af- Jeremy Corbyn, the leader of the La- on costs; the owner of one local café of- fect the unskilled. In any case, many of the bour Party, wants to give low earners fers fewer free lunches to her staff. Not poorest Britons do not work at all. another pay rise. In its manifesto Labour many seem to have responded by laying Of the main parties, the Liberal Demo- is expected to pledge to introduce a £10 off their workers. West Somerset’s unem- crats promise the most progressive wel- hourly minimum by 2020. That would ployment rate is just 3%. The job centre fare reforms. Unlike Labour, they pledge probably give Britain the highest wage looks deserted. to unfreeze benefits, reverse cuts to child floor of any big, rich country. Could the How much more can firms afford to tax credit and entirely overturn cuts to labour market handle it? pay? Under the current government’s universal credit. Along with a one-per- The worry is that unemployment plans the minimum wage will continue centage-point rise in all rates of income would rise as low-skilled jobs would be- rising, from about 55% of median earnings tax, under their plans the burden of fis- come untenable. Indeed, that seems to at the moment to 60% in 2020. Official cal adjustment falls more evenly along have happened recently in America. Yet forecasts suggest that this could ultimately the income distribution. Yet with the Lib British-economy watchers have been sur- cost around 100,000 jobs, equivalent to a Dems below 10% in the polls, many “ordi- prised time and again: since the minimum rise in the unemployment rate of around nary working families” face a tough few wage was introduced by a Labour govern- 0.3 percentage points. Those forecasts im- years ahead. n ment in 1999, increases have not caused ply that Mr Corbyn’s proposal could cost1 15 The Economist June 2016 BRITAIN’S CHOICE

the Tories over minimum-wage levels ig- a rise in household disposable income Poor economics nores a better way to help the poor. The in the year of an election significantly in- Britain, 2016 hourly wages, real % change since Labour governments of Tony Blair and creases the vote share of the incumbent 2007, by percentile for employees aged over 25 Gordon Brown boosted in-work benefits party. Recently, Britons’ real disposable 10 such as tax credits (wage top-ups for the household income has been rising at an low-paid). The Conservatives are now cut- annual rate of around 2%. 5 ting them with zest. Unlike higher mini- That bodes well for Mrs May but the + mum wages, tax credits do not threaten new government, which she is likely to 0 jobs, since their cost is borne by taxpayers lead, will take shape just as things turn – rather than employers. for the worse. The Conservatives have 5 And increases in the minimum wage pledged that public debt as a share of GDP 10 help poor families less than is commonly will fall from 2020. To this end, in 2018 supposed. Many low-paid folk are second they plan a reduction in the budget deficit, 15 earners in middle-income families (think adjusted for the economic cycle, of around 1110 20 30 40 50 60 70 80 90 00 the mum with a part-time cleaning job), 1% of GDP. This is a very tight squeeze by Lowest Percentile, hourly wages Highest whereas many of the poorest households historical standards, and something simi- Source: Low Pay Commission *Real terms do not work at all. The government’s exist- lar is pencilled in for 2019. There is little to ing plans to raise the minimum wage are suggest that a new Conservative govern- 2 about the same amount again. The upshot already expected to benefit households in ment would change its fiscal plans. would be that Britain’s economy would the seventh income decile (ie, nearer the The biggest worry for the economy, look more like those of other rich coun- richest) by three times as much as those however, is Britons’ pay. Earlier this tries, most of which have recently had in the bottom decile. Mr Corbyn’s pledge month official statistics showed that real higher unemployment than Britain, but to help low earners is welcome, but there wages, which are still below their pre- also higher wage growth. are better ways to do it than with a £10 crisis peak, have started to fall once again. The competition between Labour and minimum wage. n For this, thank the price inflation caused by the pound’s tumble. In February con- sumer-price inflation hit 2.3%, compared The economic background with a year-on-year rise in nominal wages of 1.9%. Ride the wave The pay squeeze is only going to inten- sify. Inflation could rise to 3.5% by the end of this year, according to Samuel Tombs of Pantheon Macroeconomics, a consul- tancy. As Britons’ purchasing power falls, the biggest engine of growth will stutter april 22nd 2017 (indeed, the latest figures on retail sales With a slowdown looming, the Tories have picked a good time for a vote are concerning). And to fend off the infla- INCE last June’s referendum the British pectation was that the vote for Brexit tionary threat the Bank of England may Seconomy has beaten almost all fore- would lead to tighter financial conditions. be forced to raise interest rates, crimping casts. Most wonks expected that the vote But thanks to speedy action by the Bank investment and consumption further. for Brexit would immediately tip the econ- of England to relax credit, firms’ funding Whereas Mrs May might soon be in a omy into recession. In fact in 2016 it grew costs have fallen slightly since the referen- much stronger position, the same cannot faster than that of any other G7 country— dum, increasing the expected returns on be said of the economy. n and growth was faster in the six months capital spending. Investment did stagnate following the referendum than in the six in the fourth quarter of 2016 but is still up months preceding it. In February the em- on the year before. ployment rate among 16- to 64-year-olds Bosses’ willingness to invest is also reached nearly 75%, its joint-highest level because many are optimistic about their since records began in 1971. Theresa May future. The weak pound has made their will be able to point to a strong economy wares more competitive to foreign buy- in the run-up to the June election. ers. Exports of manufactured goods were A few factors explain the economy’s up by over a tenth in the fourth quarter outperformance since the referendum. of 2016 compared with the year before. Household consumption spending, which Exports of services rose by less; Britain’s makes up some two-thirds of GDP, has re- financial-services and legal firms compete mained buoyant. Consumer confidence on quality, rather than on price. Nonethe- is solid: perhaps unsurprisingly, Leave less the current-account deficit, a measure voters are bullish, surveys suggest. Even of what Britain imports over what it ex- for Remainers, Brexit remains vague and ports, fell from 5.3% of GDP to 2.4% of GDP some way off, so they see little reason to in the fourth quarter of 2016. cut back on spending yet. Some Britons The run of good economic news comes have even brought forward purchases, at a crucial time for Mrs May. An incum- apparently loading up on foreign goods bent government’s fortunes at an election before the weak pound—down by over a mirror those of the wider economy. A tenth since June 23rd—causes prices to rise. recent study by Jonathon Clegg, then of Business investment, meanwhile, has Oxford University, looked at general elec- not suffered as much as feared. The ex- tions in post-war Britain. It suggests that Enjoy it while it lasts 16 The Economist May 2017 BRITAIN’S CHOICE

changed all that. In the general election of 2015 Labour was reduced from 41 seats to only one, as supporters of independence coalesced around the SNP. Now opponents of independence are coming together, in a few places to the benefit of the Lib Dems, but mostly around the Tories. Most of the party’s gains in polls have come from unionists fleeing Labour, which also opposes inde- pendence but with less conviction. In this month’s local elections the Tories won 25% of first-preference votes, up from 13% in 2012; Labour dropped from 31% to 21%. In Stonehaven Roy Skene, an oil engineer, explains that he “doesn’t see what good independence would do”, adding that he can no longer trust Labour to resist the SNP. (pictured) has made it easier for Labour émigrés. The leader of the embodies her party’s traditions (she is a Christian, a staunch unionist and served in the Territo- rial Army) and transcends them (she is gay, socially liberal and does not own a castle). The SNP remains pre-eminent but has slipped in the polls. In the local elections it did badly where it will be vulnerable to the Tories on June 8th. In four areas of the Scotland north-east—Aberdeenshire, Angus, Moray, and Perth and Kinross—the SNP’s share of Uniting the clans the vote fell by 8-12 percentage points. One likely reason for this pattern is the EU referendum. Scotland voted 62-38 to Remain. In no council area was there a majority for Leave. But Moray came May 13th 2017 closest, with 49.9%. Three of the five most Referendums on independence and Brexit have caused a realignment that benefits Eurosceptic areas were in the north-east. the Conservatives Leave voters are thought to account for N THE High Street in Stonehaven, a in Scottish politics. It stood for Empire, most of the drop in support for the SNP, Otown just south of Aberdeen, David Protestantism and the United Kingdom. which backed Remain. Most are defecting Kelly checks no one can hear him. “What But as secularism spread and imperial to the Tories. do I think of the Conservatives?” whis- Britain faded, support for the Scottish On the ground the SNP is nervous. Its pers the 72-year-old. “I love them. They’re Conservatives, as the party became after Aberdeenshire candidates have rushed the only option around these days.” it was absorbed into the British Tories in out a plan to open a railway line. In Moray, In recent years even hushed ardour for 1965, shrank. Tabloids portrayed Tories where Angus Robertson, the party’s lead- 1 the Tories has been rare in Scotland. But as pheasant-shooting, anglicised toffs. In on June 8th the party could win its high- 1955 the Unionist Party and its allies won est share of the Scottish vote in a general half the vote. In October 1974 the Scottish Och aye the blue Shetland election since 1979. It more than doubled Conservatives won less than a quarter. Scotland, local elections, its tally of council seats in local elections Margaret Thatcher lost the party more May 4th 2017, party with on May 4th, finishing second to the Scot- votes, as most Scots felt they had not con- most first-preference votes tish National Party (SNP). Polls suggest that sented to her economic policies. Support next month up to 30% of Scottish voters for devolution grew, paving the way for SNP Conservative Aberdeenshire Moray could opt for the Conservatives. the opening of the in Labour It would be a triumph for a party that 1999, which in turn expedited the rise of Independent in the general election of 2015 won a sin- the SNP. Aberdeen gle Scottish seat and just 15% of the vote. Conservative decline changed the City But in the aftermath of the referendum on electoral geography. Forerunners of the Angus independence in 2014, seismic shifts are Liberal Democrats picked up seats in the Perth and everyday stuff. A Conservative resurgence Highlands and islands. In the north-east Kinross is the latest effect of that plebiscite. It may voters swapped the Tories for the SNP. But yet determine whether there is a second Labour was the main beneficiary of Con- one. servative woes, winning the most Scottish The revival has been a long time com- votes in every general election from 1964 Source: ing. From the 1920s to the late 1950s, the to 2010. Elections Scotland Unionist Party was the dominant force The independence referendum of 2014

17 The Economist May 2017 BRITAIN’S CHOICE

Northern Ireland the idea of devolution could run into the Crossing the border sand. A telling indicator of this is that Scotland, % Voting intention A blow upon a the public has practically ceased to lodge Independence vote 2014 in proposed second formal complaints about the Assembly— and EU referendum 2016 independence vote bruise not because confidence in the system is growing but because it has plummeted. and Remain According to the Assembly’s standards 28 April 22nd 2017 watchdog, Douglas Bain, a striking drop Yet another election will not help efforts in complaints in the past year was due in NO NO to patch things up Yes-to-nnoo 46 large part to lack of confidence: “No right- and sswingwing Leave HEREAS the June vote is likely to minded person could seriously believe” 16 Wshore up Theresa May’s position in that it was because politicians were “be- and Westminster, the poll could cause consid- having better”, he said. Remain No-to-yes erable damage to her government’s efforts Brexit played little part in elections to 21 swing to make progress in Northern Ireland. the Assembly on March 2nd. It is more YES YES and 39 Talks between the two main parties, likely to be a backdrop in this contest than Leave the Democratic Unionists (DUP) and Sinn a central issue, since most electors cast 14 Fein, have been dragging on for weeks their vote in accordance with patterns es- Did not Don’t with the aim of putting back together a tablished decades ago. The DUP character- vote in at know/ least one would power-sharing agreement which broke ises the election as a chance to vote for 21 not vote down in January. So far the talks have the union with Britain, whereas Sinn Fein 14 Source: YouGov shown an exasperated public only that describes it as “an opportunity to oppose unionists and republicans are capable of Brexit and reject Tory cuts and austerity.” talking almost indefinitely without offer- Rival unionist parties are likely to sink 2 er in Westminster, is under threat from the ing meaningful concessions. some of their differences and form voting Tories, the pro-independence Greens have Mrs May’s inexperienced Northern pacts aimed at halting recent advances stood down to help his chances. Ireland secretary, , had made by Sinn Fein, which last month The SNP’s support in Scotland’s central called an Easter pause to the talks in the came within barely 1,000 votes of be- belt means it will still have the vast major- faint hope that the two sides might return coming the biggest party in the Assembly. ity of seats after June 8th. But the shifts to the table in a more constructive mood. The election is “a golden opportunity to suggest that , the party’s Instead, the parties will between now bounce back”, the DUP says. The Orange leader, has misjudged the effects of the and June 8th be locked in hand-to-hand Order, an influential protestant group, has EU referendum. Expecting it to boost sup- electoral combat for Northern Ireland’s 18 given its blessing to pacts. port for independence, she has called for Westminster seats. Even if the unionists are able to in- a second plebiscite on secession. In fact, A less conducive atmosphere for crease their share of Northern Ireland’s the net effect of the EU vote has been nil achieving compromise is hard to imag- MPs, which currently stands at 11, they (see chart). Some Remainers who voted ine. Elections to the Assembly on March face the prospect of having less influence No to independence in 2014 would now 2nd were bitter. A low point came when in Westminster. With her current working vote Yes, seeing secession from Britain the DUP’s leader, , likened majority of 17, Mrs May values the sup- as a way back into the EU. But a similar republicans to crocodiles. The thought of port of Northern Ireland’s unionists (the number of Leavers who voted Yes in 2014 the two sides once again battering each republicans don’t take their seats in the have switched to No, in order to protect other has caused dismay. The British gov- British Parliament, on principle). But if she Brexit. One Aberdeenshire fisherman says ernment insists that the talks can go on increases her majority by as much as ex- he voted for independence to get a better and that “the prospect of a forthcoming pected, they will matter to her far less. n deal on EU fishing quotas, but now pre- UK general election does not change this fers Brexit, which he hopes will mean no approach”. quotas at all. Among those clearly peeved by Mrs The SNP believes it has demography on May’s announcement is the Irish foreign its side; less than a third of Scots aged over minister, Charles Flanagan, whose gov- 70 voted for independence. The party also ernment was already mightily vexed by expects frustration with the union to grow the Brexit project. He warned: “All of the after Brexit actually happens, in 2019. And parties will now be competing in a gen- for all Ms Davidson’s ribald congeniality, eral election and mindsets will inevitably she still has work to do to convince Scots shift to campaign mode.” that she could become first minister. Nor is the atmosphere likely to be Fortunately for her, that is a problem much more favourable after June 8th, for the next Scottish election, in 2021. For since by then the Orange parading sea- now, after a decade of huge advances the son, in which protestant marching bands snp is set to take a small step back. Sup- commemorate the walloping of Catholics port for independence remains steady. But in long-ago battles, will be under way. The the zeal of the past few years is abating. general rule is that little political business At the Waterfront Café in Stonehaven, Pa- can be done when the bands are on the tricia Speirs worries that “the timing for streets, due to heightened communal ten- independence has been and gone”. The sions. local economy is struggling. Her friends Much credibility has already drained are voting Conservative. “It’s very sad,” from the Assembly, and there is a danger she says. n that months more deadlock might mean The writing on the wall 18 The Economist May 2017 BRITAIN’S CHOICE

Leadership failures to successes has worsened. The best leaders bring together people with The two Theresas different strengths. Mrs May’s team brings together people with exactly the same weaknesses. Two vulnerabilities are par- ticularly worrying: a profound ignorance of economics (Mrs May hasn’t had to soil april 29th 2017 her hands with any business-related sub- Two prime ministers were on display this week—one thoroughly competent, the jects since she briefly worked at the Bank other less so of England in 1977-83) and a preoccupation HERESA MAY struck the right tone in six grinding years at the . with internal party politics. Mr Timothy Tthe aftermath of the bombing in Man- She became the empress of her brief. in particular is obsessed with refashion- chester. She delivered two businesslike Both friends and enemies describe her ing the Tories as a more blue-collar party. addresses to the nation, the first express- as a dogged worker with almost no small Issues with far-reaching economic conse- ing an appropriate mixture of outrage at talk. She relied on two ferociously loyal quences, such as migration, are too often the atrocity and pride in the response, the special advisers, and Fiona treated as problems of law and order or second announcing the decision to raise Hill. She fought her corner against cabinet opportunities to reposition the party. the threat level to “critical” and deploy colleagues who either dismissed her as a troops on the streets. She chaired two dullard or, as she stuck around for years, May the best May win emergency meetings of ministers and of- feared her as a rival. The dangers of this approach were appar- ficials and then travelled north. The prime This approach brought significant suc- ent in Mrs May’s U-turn over social care. minister was the personification of keep- cesses. Mrs May showed civil servants The Tory party’s manifesto tried to tackle calm-and-carry-on. who was boss—no mean achievement in two of Britain’s biggest problems—the Yet just the day before the bombing a a huge and lethargic bureaucracy—and rising cost of looking after elderly peo- very different Theresa May had been on took on vested interests such as the po- ple and the concentration of wealth in display. She performed an embarrassing lice. But it also produced significant fail- the hands of the old—with an audacious U-turn on her party’s policy on social ures. She ignored appeals by her cabinet suggestion: why not get oldsters to fund care for the elderly and then tried to pre- colleagues to relax a clampdown on for- more of the costs of care themselves? But tend that the U was a straight line. This is eign students, despite the damage that her it ignored crucial details such as putting a perhaps the first time that a party leader policy was doing to higher education, an cap on costs. Looking after someone with has dumped a central manifesto promise area where Britain excels. dementia can wipe out even a prosperous before a general election. She then gave It is hardly surprising that Mrs May ap- family. Sir Andrew Dilnot has discussed a disastrous interview to Andrew Neil on plied the formula that had kept her on this subject in an exhaustive government the BBC which revealed holes in her un- top of the Home Office for so long when report on social care. Cabinet ministers derstanding not just of basic economics she became prime minister. She installed such as , the health secretary, but also of her own manifesto’s commit- Mr Timothy and Ms Hill as her co-chiefs have grappled with the problem for years. ments. Far from “strong and stable”, the of staff and centralised control of all de- But apparently Mr Timothy added the phrase repeated endlessly in her cam- cision-making. But on her new territory, half-baked proposal without running it paign, the prime minister looked “weak much larger and less familiar, the ratio of past the cabinet or digesting Sir Andrew’s1 and wobbly”, as one journalist put it. Anybody can have a bad week. Mr Neil is a tenacious attack dog: few continental leaders are subjected to this level of pub- lic interrogation. It is better for politicians to withdraw flawed policies than to keep defending them. But there is a limit to the number of excuses that one can make for someone who is not only seeking the highest office in the country but is also presenting herself as uniquely qualified to negotiate a divorce settlement with Europe that could shape the country for a generation. The manifesto meltdown and the Neil kebabbing revealed three worrying things about Mrs May. The first concerns her man- agement style, which is to rely on a small group of advisers, refuse to consult and make big decisions on the fly. The second concerns her knowledge. Mr Neil’s inter- view reinforces the established impression that she knows precious little about busi- ness and economics. The third is that these two reinforce each other: the further she moves into unfamiliar territory, the more dysfunctional her approach becomes. Mrs May perfected her style during

19 The Economist May 2017 BRITAIN’S CHOICE

2 findings. let alone independent experts, think it Yet elderly folk have also been coddled by This is part of a worrying pattern: consult- achievable. the Conservatives—most obviously by the ing too narrowly, riding roughshod over The difference between a successful “triple lock” on the state pension, which opposition and then backtracking igno- politician and an also-ran is not how they David Cameron, Mrs May’s predecessor, miniously or carrying on regardless. Two respond to success but how they respond implemented in 2011. It ensures that pen- months ago Mrs May abandoned a budg- to failure. Successful ones treat it as a sions rise in line with whichever is high- et proposal to raise national insurance chance to up their game. Also-rans alter- est: inflation, earnings or 2.5%. Mr Camer- contributions for self-employed workers nate between stubbornness and retreat on also lifted the inheritance-tax threshold because she and her team had failed to without bothering to pause for reflection. for those wishing to pass on houses to spot that it clashed with one of David Mrs May should treat the manifesto melt- their children and ruled out a “mansion Cameron’s manifesto commitments. She down as a warning and an opportunity: a tax” on those with pricey homes. remains obsessed by reducing annual net warning of what will happen if she con- The shift of the elderly towards the migration to “tens of thousands” (from a tinues with business as usual, and an op- Tories has been turbocharged under Mrs current level of about 250,000) despite the portunity to shake up her inner circle and May. Asked who would make the best fact that none of her cabinet colleagues, broaden her thinking. n prime minister, 86% of over-65s endorse her, compared with just 9% for Mr Corbyn after don’t-knows are excluded, according The elderly vote to YouGov. The newish prime minister has courted the elderly, with policies that hark Grey to blue back to the good old days (including a plan to revive selective grammar schools) and endorsements of traditional values (she attacked the National Trust, a conser- vation charity, for organising an egg-hunt that supposedly failed to give sufficient may 6th 2017 mention to Easter). In Downham Market, Why the elderly are keener than ever on the Conservatives locals compare her favourably to Margaret OWNHAM MARKET, a town of of the bargain. Britain’s population is age- Thatcher. Her middle-class background is D10,000 souls perched on the edge ing. At the moment three in ten Britons part of the appeal: Robert, an upholsterer, of Norfolk’s Fenland, is quiet on an over- are over 60; by 2030 it will be four in ten. notes that unlike Mr Cameron she wasn’t cast bank-holiday Monday, save for a few And the grey-haired are more likely than born with a “golden spoon” in her mouth. shopping pensioners. The town is dotted youngsters to vote, making them a prized Most important, since last June’s refer- with civic organisations, including a lawn- constituency for any party. endum Mrs May, who backed Remain, has bowling club, churches and a Conserva- Why have oldies embraced the Tories? become a devoted convert to the cause of tive association. In its southern neigh- Many of those who once voted for other Brexit, which she interprets as a mandate bourhood around 60% of the population parties, as Ms Jackson did, have enjoyed to cut immigration. Older voters were is over the age of 65, making it the oldest a big improvement in living standards un- Brexit’s strongest backers, with six out of of England’s 7,500 or so electoral wards. der the Conservatives, who have been in ten pensioners voting to Leave. After the Not coincidentally, it is deep blue territory. power since 2010. Poverty among the el- plebiscite support for the Conservatives Linda Jackson, a retired nurse, spots derly recently fell to its lowest level since among over-65s rose from 47% to 56%, some admirable qualities in Jeremy Cor- records began in 1961. The average incomes according to Ipsos-MORI. The referendum byn, Labour’s leader. “He’s got an allot- of retired households are now higher than also precipitated the collapse of the UK In- ment, so he’s obviously a good man,” she those of working ones, once housing costs dependence Party, many of whose elderly chuckles. But although she is a longtime are accounted for. Small wonder that they supporters have returned to the Tory fold. Labour supporter she does not plan to want to keep the status quo. Mr Corbyn has contributed. As bunting vote for him: “He doesn’t seem to be able Their improved lot is in part thanks to embroidered with the flag of St George to lead his party, let alone the country.” structural economic changes. More “re- flutters overhead in Downham Market’s Instead she is considering a vote for the tired” people are supplementing their pen- central square, Geoffrey, a pensioner, com- “competent” Theresa May. sion with work on the side and many have plains about the Labour leader’s scruffi- Ms Jackson is not alone. Although the benefited from Britain’s property boom. ness when attending a Remembrance elderly have long leant Conservative, in Sunday ceremony in 2015. “He should recent years their support for the Tories have behaved better than that,” he says, has become entrenched. In general elec- Generation gap “so he shan’t be having my vote.” Anoth- tions from the 1980s to the 2000s, pen- Britain, % of age group intending to vote er expresses dismay about Mr Corbyn’s sioners were around one-third more like- Conservative at next general election opposition to the renewal of the Trident ly to vote Conservative than were 18- to 70 nuclear-weapons system. His conciliatory 24-year-olds. By 2015 they were two-thirds 60 attitude towards the IRA may also repel more likely to do so. If the opinion polls 50 voters old enough to remember its cam- 65+ are right, as many as seven out of ten vot- 40 paign of terrorism. ers aged 65 or over will go with the Tories Issues such as these could provide cov- 30 in the general election on June 8th. er for Mrs May if, as she has hinted, she 18-24 An uptick in Labour’s popularity 20 drops her party’s commitment to the pen- among the youngest explains some of the 10 sions “triple lock”. Mr Corbyn came out in generational divergence. But it is small 0 favour of keeping the policy in November, compared with the surge in the Conserva- 1987 92 97 200105101517* but apparently in vain: since then there tives’ popularity among elderly voters. Sources: ComRes; ICM; *Estimate using Ipsos MORI; Opinium; YouGov 12-poll average has been no sign of increased support for The Tories will be pleased with their side him among Britain’s grey voters. n 20 The Economist May 2017 BRITAIN’S CHOICE

Onlining campaigning Voting A fresh canvas Turn on, tune in, turn out?

may 27th 2017 Election fatigue and a big gap in the polls may persuade voters to stay at home may 27th 2017 HESE are exciting times for political People are also more likely to stay Digital democracy is changing the way journalists. For everyone else they at home when the race looks uncom- elections are fought, for better and worse T are wearying. It is only two years since petitive. A meta-analysis of 52 studies UMATRA ROAD, in north-west Lon- the most recent general election and less on election turnout by Benny Geys of Sdon, is a heavily canvassed street. than 12 months since the Brexit refer- the Free University of Brussels found It lies in the marginal constituency of endum. Much of the country had local that 36 of them established a relation- Hampstead and Kilburn, which Labour elections earlier this month. Scotland ship between the closeness of the won in 2015 by little more than 1,000 and Wales elected their regional parlia- race and the strength of turnout. Next votes, and is a convenient half-hour Tube ments less than a year ago; Scots had month’s contest does not fare well in journey from Parliament. Its residents are previously voted on independence. The this category, either: although Labour used to spending the weeks before elec- poor Northern Irish have had to elect has recently caught up a bit, Theresa tions traipsing to and from their front their regional assembly twice in little May’s Tories are a good ten points clear doors to receive petitions from politicians more than a year. Who will have the en- in most polls. The last time an election of all stripes. ergy to turn out for the general election was so predictable, in 2001 (when Tony This year a different sort of campaign is on June 8th? Blair steamrollered ), being waged, away from this corridor of Frequent votes are known to depress turnout slumped. red-brick terraces. Digital electioneering, turnout. An analysis by Colin Rallings This year may yet surprise. The Brexit in which political parties buy adverts that and others at Plymouth University of referendum attracted a healthy turnout target users of social media, was first used nearly 4,000 local-government by- of 72%, with 3m more votes than the on a large scale in Barack Obama’s 2008 elections between 1983 and 1999 found most recent general election. It may be presidential bid. Since then it has grown. that the less time had elapsed since the that those new voters are still engaged. Dominic Cummings, who was campaign previous election, the lower the turnout. And although the race is not close, director for Vote Leave ahead of the Brex- A more recent study in Germany drew there is plenty of variety in the parties’ it referendum, has said that 98% of the the same conclusion. manifestos. Labour is running on its campaign’s money was spent on digital most left-wing platform in decades; the advertising. Labour aims to spend £1m Yawning gap Tories are gunning for a hard Brexit; ($1.3m) on it in this year’s election, hav- the Liberal Democrats want to reverse Britain, turnout at elections ing been outspent by the Tories last time. % of registered voters it altogether. The usual complaint that Most of the ads are placed with Facebook; 90 “they’re all the same” does not apply. some are bought on YouTube, owned by 2014 Scottish Whatever the turnout, it will affect independence 85 Google. referendum future elections, too. One of the strong- Political ads can be targeted with high 80 est determinants of a person’s likeli- precision using the personal data held by 2016 EU referendum 75 hood to vote is whether they voted social networks, allowing canvassers to in the previous election. The trough General 70 pick and choose whom they talk to: par- elections of 2001, when turnout plunged by 12 ents, pensioners or Economist readers. 65 percentage points, is one from which , which is campaigning for 60 Britain is still recovering. If the combina- the country to stay in the European Un- tion of fatigue and predictability lead to ion, has sent an ad to people aged 20-31 1945 55 65 75 85 95 2005 16 a low turnout next month, the effects who live in the constituencies of Birming- Source: House of Commons may be felt for years. ham Yardley, Wimbledon and South West Norfolk. The public appears wary of this kind of digital canvassing. In a survey of of data analytics for political purposes. other features of online canvassing that American voters in 2012, 85% said they How sinister is it really? Sam Jeffers, have got people worried. The first is that would be angry if they found out that “Fa- who runs a digital marketing consultancy online messages can be sent farther and cebook was sending me ads for political called The Shop and has advised the La- faster than in the offline world. “The web candidates based on my profile informa- bour Party, is sceptical. He points out that is frictionless,” says Kate Klonick of Yale tion”—which it does. even large companies are not very good Law School, who has spent the past year “A good deal of the anxiety and fear at targeted, data-driven advertising—as studying how free speech, including po- is down to opacity,” says Martin Moore, anyone who has been chased around the litical campaigning, works on Facebook. director of the Centre for the Study of Me- internet by the spectre of a fridge they And unlike conventional political ads dia, Communication and Power at King’s bought the previous week can attest. “Big and leaflets, online messages can be tai- College London. “It would be much easier companies are spending hundreds of mil- lored to each recipient. They are thus to apply election principles and laws if lions a year on their marketing and aren’t harder to inspect—especially because the we knew what was being communicated, doing it very well,” says Mr Jeffers. Why largest platforms on the web, including to whom, and how much it cost.” Eliza- would political parties be able to do it any Facebook and YouTube, do not work with beth Denham, Britain’s information com- better? “You’re expecting organisations on third-party researchers or journalists who missioner, who enforces data-protection a month’s notice with £1m to do things want to observe political parties’ cam- rules, announced on May 17th that she that are persuasive and accurate,” he says. paign messaging. Unlike Sumatra Road, would open an investigation into the use Beyond the invasive profiling, there are which any politician or hack can plod in 1

21 The Economist May 2017 BRITAIN’S CHOICE

2 search of votes or stories, Facebook is a had sent, nor the logic behind their target- in contrast to the battery of private mes- maze of virtual streets in which parties ing. Labour provided a small sample.) A sages that are simultaneously reaching can campaign with little scrutiny. few third parties are on the case. Mr Jef- residents via their computers and smart- Precise demographic targeting has up- fers has built a piece of software called phones. As Britons go to the polls, each sides. Digital canvassing offers a way to Who Targets Me that offers to monitor the has been the recipient of a sometimes send people information relevant to them: social media feeds of concerned voters. widely contrasting series of political before the deadline for registering to vote On Sumatra Road, political signs and messages. In future, victory will belong on May 22nd, Labour sent young people posters decorate gardens and windows. to whichever party can master the art of videos (featuring cats) urging them to sign The public displays of political loyalty, waging tens of millions of minutely per- up. Targeting like this could help to raise and the canvassing done in the open, are sonalised campaigns. n interest in politics at a time when turnout is low. It can, however, be used to achieve the opposite effect. ’s strate- Ground troops gists admitted to using targeted online ad- Which of the following did you do for the party during the 2015 election campaign? verts to demoralise supporters of Hillary Britain, party members polled, % replying Clinton into not voting. An animation en- Conservative Labour Liberal Democrat UKIP Green SNP titled “Hillary Thinks African-Americans 0210 0430 0650 0870 0 are Super Predators” was sent to groups “Liked” something by party/ of black voters via Facebook, calculated to candidate on Facebook prevent them from turning out. “Only the Tweeted/re-tweeted people we want to see it, see it,” Brad Par- something by party scale, Mr Trump’s digital canvasser, told Displayed election poster Bloomberg at the time. in window As targeted advertising makes it possi- Attended public meeting ble for parties to offer different things to or hustings different voters, there is a risk that they Delivered leaflets will make promises that are mutually in- Canvassed face-to-face consistent. Conflicting promises can be or by phone easily masked from different groups. This may blind voters to the compromises of Source: ESRC Party Members Project politics, eventually eroding trust. Finer tar- geting may also be a problem in light of As party leaders fight for the airwaves, armies of activists are pounding the ground. research from America which shows that Whose are the most energetic? Research from the 2015 election suggests left-wingers are targeted messaging has led to more ex- the loudest and proudest. Members of the leftist Scottish National Party and Greens are treme party positions regarding religion. the most likely to share party material online. Lefties also like displaying posters, which The Electoral Commission, which regu- Conservatives seem sheepish about. But when it comes to hard graft, the right-wingers lates campaigns in Britain, requires details come out in force. Tories are the most willing to canvass voters on their doorsteps and of campaign spending to be kept, but like delivering leaflets. (Greens, true to their beliefs, don’t seem to print many.) Members does not require the content of online or of the right-wing UK Independence Party are big on public rallies. The differences may offline messaging to be recorded. (When be down to age: the web-savvy Greens and Scottish Nationalists are, on average, a good asked, the Conservatives did not show decade younger than the Tories and UKIPers who campaign the old-fashioned way. The Economist any of the digital ads they

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Credits in order of appearance: Cover: Ben Kirchner Inside: David Parkins (p3), Getty Images (pp4, 6, 8, 12, 17), Satoshi Kambayashi (p9), Bridgeman (p13), PA (p14), Alamy (pp15, 20), Bloomberg (p16), AFP (p18), Miles Cole (p19), Dave Simmonds (p22)