Populus show Tory lead back into double figures
With the clear trend having been towards Labour since Gordon Brown’s bail out of the British banks, right at the tail end of last year we saw a couple of YouGov polls that indicated the trend might be moving back towards the Conservatives. The first poll of 2009 from Populus certainly appears to back that up. The topline figures, with changes from Populus’s December poll, are CON 43%(+4), LAB 33%(-2), LDEM 15%(-2). The poll was conducted between the 9th and 11th January. It puts the Conservatives back above the psychologically important 40% level and back in an election winning position, which will no doubt deliver them dividends in terms of morale and media narrative.
Other measures are also moving away from Labour again, Brown & Darling’s lead on dealing with the economic problems has dropped to 3 points from 9 last month, Gordon Brown’s lead as the best PM right now to deal with the economy has gone from 7 points last month to 0 now (as Peter Riddell points out in his commentary, it was as high as 20 points back in November) and Cameron’s 2 point lead on being the best PM after the next election a month ago has grown to 12 points.
As ever, we need to be slightly wary when the polls appear to change direction – one man’s beginning of trend is another man’s rogue poll – but with YouGov and Populus now showing the boost in Labour’s support from their handling of the economic crisis now beginning to wane, it is looking as if the Brown economic bounce is coming to at an end.
The poll also shows economic confidence falling again, after the rather counterintuitive increase towards the end of last year. While the sharp contrast between people’s pessimism about the economy as a whole and their relative optimism about their personal fiances remains, both have dropped since Populus last asked the question. In November net economic confidence for the country had rallied to minus 35, now it is down to minus 61, lower than it was in the summer. In November Populus record net economic confidence for people’s own families had actually returned to positive territory at plus 7, now it is down to minus 4, still far above the lows it hit in the summer.
Filed under: Populus, Voting Intention
John TT: Delighted to see that the CofE is expected to do it’s bet. I hope that collections in the Church of England do go up substantially – though I fear they may not.
BTW the Spaghetti Monster and the Teapot are second and third only to Dawkins’ risible “747 Gambit” as the worst “arguments” in philosophy of religion.
Mark – this from a detailed article on VAT rises cf rediff.com :
“There is unanimity among the economists all over the world that there seems to be nothing inherently inflationary about the use of VAT”
So if increasing VAt is not inflationary, then decreasing it is not deflationary. The effect on prices is neutral.
However, my point was that increasing the amount of money in circulation is inflationary as it stokes demand. A good thing for now, but when the good times begin to return, the money has to be retrieved, and it’s easier to do that by increasing VAT than by increasing other means to choke demand.
Colin – Inflation is reducing because the effects of cost-push inflation (oil and food prices going up) have not been sustained.
Not because of desperation in the retail sector to meet rent deadlines, or any other significant reason.
Nbeale. Nice one.
oops-got Digby wrong-he actually said “half as many” !
http://news.bbc.co.uk/1/hi/uk_politics/7830521.stm
I’d still settle for 15%
“Not because of desperation in the retail sector to meet rent deadlines,”
I think you are wrong john-and your characterisation of the desperation as a temporary cash flow problem is hopeful rather than
We shall see in due course .
……than realistic !
John
Thanks for the article quote. It seems a lot of so-called economic ‘theory’ comes down to what you believe. If you google for ‘VAT cut deflation’ you’ll return a number of articles quoting economists as saying that Darling’s VAT cut risks deflation.
You are right that IF raising VAT is not inflationary then lowering it is not deflationary. But if that was the case, why did warnings come from other economists about deflation?
That’s probably why there’s no real consensus about the best thing to do. World leaders will be doing their fiscal stimuli so that they appear active but in reality they’ve no idea whether it’ll work.
John TT> “However, my point was that increasing the amount of money in circulation is inflationary as it stokes demand”
You are assuming that reducing VAT will increase the amount of money in circulation.
By that, I presume you believe that money in the hands of the public and spent, is different (and in this case, more beneficial to the economy) than the same money in the hands of the government and spent by govt departments?
Because a VAT cut does not increase the amount of money in the economy – it simply puts it back into the hands of the public, rather than the treasury.
[NBeale> oooh, now you're tempting me to go off topic again about the Church of the Spaghetti Monster, which I consider to be a very elegant demonstration of the absurdity of a superstitious religious belief in an invisible, untouchable God...but I'll resist!]
[Sorry Anthony]
James-your braver than I -but you give me courage to say-NBeale-Dawkins 747 is irrefutable unless you say the Theist only has to argue from eternality.
Sorry Anthony.
@ James
Well resisted, we Jedi approve
@ John T T
Just because a force does not push in one way does not indicate it would not push in abother. Therefor it is more credible to say that “There is unanimity among the economists all over the world that there seems to be nothing inherently inflationary about the use of VAT”
is actually an argument to say that it is inherently deflationary.
For example gravity is universally agreed to not push an object away from another object…you see my point.
John TT
“cutting VAT is infaltionary, as it pumps more money into the economy ,stimulating demand and leading to increased prices. The time to stimulate demand in that way is now.”
I really don’t think so. We have seen in the last couple of months that cutting VAT does not pump more money into the economy, it puts more money into consumers’ pockets (or rather takes less out of their pockets). At a time like this, when most people are swimming in debt, struggling to pay mortgages and generally skint, any extra money in their pocket is likely to stay there, not be pumped back into the economy.
This is where Brown/Darling are so woefully out of touch with everybody else. They spend all the money they have, and lots they dont have too, and they assume everyone else will do the same, whereas most people don’t want to be in such disasterous levels of debt.
The effect of the VAT cut will be lower prices in the shops = deflation. It will not stimulate demand (this is obvious already, and should have been obvious even before the VAT cut) as the country is in deep recession, so the prices will not go back up any time soon.
As it happens, there is already rampant deflation: look at the housing market, cars, clothing, household goods, you name it, there is deflation. The exceptions are food, which is remaining about steady and public transport, where there is out of control inflation. The economy is in a bigger mess than it has been for a very long time.
Colin
I’d hate to get off topic, but the “Ultimate 747 gambit” is far from irrefutable, it is a rambling nonsense. As you quite rightly point out, the idea of eternity is inescapable, and as we know matter is not eternal (as the universe appears to be expanding), whatever is eternal must be intangible.
Sorry Anthony
i think so Keir, but you might have veered onto “Russell’s teapot” territory with that gravity reference, in which case, I’m with nBeale.
I believe the effect of the recent VAT cut will be neutral on inflation and its reversal will also be neutral. (When I say “believe” I mean it in the “I retain the right to doubt and question” sense of the word, with which I think nBeale concurs)
James -” than the same money in the hands of the government and spent by govt departments?” No – in this case not spent by Govt, I mean not borrowed. So if money is borrowed and put to use in the form of a VAT cut, it has to be paid back, not re-spent.
Clearly the aim is to get £12bn out of borrowing and into circulation via VAT cuts. When the time comes to return that £12bn (ie when we are in an upswing) it’d better come from an increase in VAT than an increase in income tax, from a political/popular perspective.
Failure to take it back will result in inflationary pressure.
neil – “any extra money in their pocket is likely to stay there, not be pumped back into the economy.” Exactly, which is precisely why they put £12bn of spending tax cuts through instead of £12bn of income tax cuts. The purpose is to inflate the economy, not to increase the amount of money in people’s pocket.
John TT
I do actually agree that the VAT cut will be roughly neutral in inflationary terms, but I think it will tend more towards deflation than inflation.
With regard to the aim being to “get £12bn out of borrowing and into circulation via VAT cuts” – this is probably the logic used by Darling, but it is flawed. The government has to borrow this £12bn (unless it raises income tax, which is unlikely), and as I pointed out earlier, it will not go back into circulation because people don’t want to spend it just now.
Neil – I appreciate your position, but the thing about this £12bn VAT cut is that if people do spend money on VAT-able goods, then the economy will have £12bn more in it than it would have had if the VAT cut had not happened.If they don’t spend the money, the VAT cut cost of £12bn won’t happen.
If you like, look at it like this : The Govt decided to spend £12bn, and they ear-marked £12bn from the VAT pot to spend it. They then decided not to use that, so that they could leave that £12bn out there (whether it remains in the balance sheets of the retailers or is passed on in amongst price cuts). Because they still want to spend the £12bn, they’re borrowing £12bn instead.
Wherever that £12bn goes, it goes into circulation, and has to be retrieved from circulation in future in order to reduce borrowing by £12bn (plus interest)
…OR we could just sack £12 billion a years worth of ‘Gay and Lesbian awareness coordinators’ and ‘Equality action group supervisors’ !
Yes, all 600,000 of the pesky wasters
Or perhaps they could freeze the NHS budget for the next two years, saving around £18bn.
Looking at the PBR makes interesting reading. The defense budget is planned to be frozen until 2010/11 yet the NHS budget, which is currently £1.45m per capita, will be growing at 6.3% pa.
Go figure.
Neil-
A priori vs a posteriori
Certain Faith vs Uncertainty
Empiricism vs Revelation
These pointless dialogues really.
Whatever boost to consumer spending the VAT reduction is or is not having, it was a pretty crude instrument.
The very poorest households benefit less because most of their spending is on food and children’s clothing, which are VAT-free, and on heating and electricity, where the lower-rate VAT level is not being changed.
The more well off benefit more because they can afford big ticket VATable discretionary purchases like cars & electrical goods.
VAT exempt organisations who cannot reclaim Input VAT, will see their operating costs fall. These include Banks & Insurance Companies.
The Whisky Industry experienced zero price effect as Duty was increased at the same time as VAT was cut. They have been told by The Treasury not to expect Duty to come down when VAT goes up again.
If the objective of increased consumption is to keep companies in business & employees in jobs, then surely there were better & more effective ways of spending £12bn -cutting NI for example.
The updated German package is interesting to contrast with Brown’s:-
The main element is a €100 billion of loan credits and state guarantees. This is pitched especially at larger companies.
Other elements include a reduction in the lowest tax bracket from 15% to 14%, an increase in tax allowances, a green incentive on scrapping old cars in favour of newer, more environmentally-friendly models, healthcare cost reductions, and a one-off payment to families of €100 per child.
There is no VAT cut, & no further bank recapitalisations.
Germany has almost balanced the budget in recent years, especially since Angela Merkel came to power in 2005.
The German government in its package is committing itself in the future to a constitutional provision that the deficit will not exceed ONE HALF of one per cent.
The government should not be trying to stimulate demand. They have done that enough over the last decade. Stimulation of demand was THE PROBLEM. The reduction in demand we are now seeing is the solution.
Printing money/increasing the money supply does not “cause” inflation. It is the definition of inflation. Inflation *is* an increase in the money supply. The money supply can be increased by printing money or by, guess what, increasing available credit. Increasing the amount of available credit (inflation) *results* in higher prices. Artificially high prices. No real value has been added. Exactly what caused the situation we are in. And what does the government want to do to solve it? Increase the money supply some more!
But giving us credit implies we will actually create this real wealth at a later date. Now that lenders have realised we are not productive enough, the credit has gone. Prices must now fall. Stop talking like this is the problem. Like we need to get credit out there again to maintain this artificial level of demand. WE ARE NOT WEALTHY ENOUGH TO MAINTAIN THIS LEVEL OF DEMAND. We are not productive enough. We simply cannot afford to demand all this “stuff.” Thats why we have been doing it on credit! If we could afford it there would not be a credit crises because none of us would be defaulting on our debt! We wouldnt even need credit if we were actually earning enough to justify the levels of demand in the first place.
Less credit and less demand is the solution.
An increase in the money supply is the biggest evil there can possibly be. It is a tax on savings. Prices go up and your savings can buy less and less with each passing day. But the people creating the money out of nothing (the government) suddenly have something to spend. The transfer of wealth is complete and the government then goes and blows your savings on incompetent companies and individuals and on digging ditches so they can employ people to fill them up again.
Anyone that saves a portion of their income for the future is literally being stolen from. And this is what people are suggesting occurs right now. I guess these people are the irresponsible ones. The ones with huge debts. Of course they want to steal from savers so they can pay their bills.
BTW, the government is passing a bill so that they are no longer legally required to report how much money they are creating. Just a little nugget. Now I wonder why they would be wanting to do a thing like that?
Interest rates need to go up. A lot. Because savings need to be encouraged right now. Not nearly enough savings exist. Where do you think credit comes from? Of course there is a shortage of credit when there is a shortage of savings to be lent. Nobody needs credit anyway. They cant pay back the credit they already have. They cant afford to buy anything else.
The government should not even “set” interest rates. Setting an artificial price of money is ridiculous government intervention and it is what got us into this mess. Setting interest rates is not a tool to fight inflation. It is a cause of inflation. Cheap money encouraged by Gordon Brown early in the decade (to fight off our “manufacturing recession” LOL) and it all ended up in the housing market and on consumer goods. And now he wants to defy gravity again. He wont succeed this time thankfully. People know they are in trouble and are taking prudent measures. (Gordon wouldnt know anything about being prudent though.) But if he did succeed it would just store up an even bigger disaster down the road. He cant fool consumers this time though. Why do you think banks are resisting lowering interest rates? Because they know its not prudent. Why do you think consumers are battening down the hatches? Because they know, even if Gordon doesnt, that they have over extended themselves and they have got to pay off the bills for what they have already had.
Oh, by the way, dont let the secret off this message board, but falling prices are actually a good thing not a bad thing. Whats the message about deflation? That people will never buy anything because they will keep waiting and waiting for prices to get lower and lower? LOL. Amazing that the public fall for that. If that were the case, house price crashes would never end. Are people seriously suggesting that asset prices are going to tend to zero now? Because people are just going to keep sitting on the sidelines expecting them to keep falling forever, right? Asset prices will fall to reasonable levels. Levels people can afford. Levels where they would rather be able to buy less, but get the benefit of having it now right now. Prices will come down to the natural and affordable levels they should have been in the first place. This is a good thing.
Personal computer prices have been dropping like a stone for a decade or more. They used to be about $10k each. Now you can get them for about $23 each. No wonder those things still havent caught on. Everyone is waiting until they fall to $1 each. I, on the other hand, am a real sucker. I have bought about five in the last decade. Im even typing this message on one right now. What a fool.
This message board needs a “preview post” button.
Of course, I meant £1,450, not £1.45m. A slight issue with numbers of zeros
It still seems odd that they can freeze the defense budget and not get called on cuts as the Tories would do.
Mark M
In the UK we have a defence budget.
If you want a defense budget go to the US of A
Returning to the inflation/deflation discussion. The reason we are now facing deflationary pressue is that there has been a major contraction of the money supply. That is what you get by definition with a credit crunch.
I suspect that in such a fast moving situation the data lags the real world by a long way. When we look back in hindsight my belief is that we will see that 2008/9 saw a proportionately much larger contraction than 1931/2 when the Credit-Anstalt collapse signalled a more general banking collapse and the depression (which did not start with the 1929 Wall Street collapse.
As Keynes and Friedman would agree the most appropriate policy response by government to such contraction should be to support the extension of credit to expand the money supply again.
This could be through public or private routes or more normally a combination.
If Government does not respond appropriately the prospects for the UK economy will be dire. Sadly neither main political party (and I speak as a long term supporter of one of them) seem to have grasped the nettle.
Actually the UK Government in the 1930’s did not make such a bad fist of it, of course there was severe recession in the 1930’s, but the UK was spared the worst effects of the depression as seen in the USA and Germany.
Can’t resist making a related comment that one of the key decisions back then was coming off the gold standard. (Thank the lord we are not in the Euro)
Message to M
I nearly decided to ignore your comments of Jan 14th 10.24, however they are so crass that I could not do it.
Your views are reflect a “nasty” tendency which is not only economically illiterate, but which also explains why everyone, including most decent conservative supporters hated so much about the last Conservative Government.
I hope that your views are those of a sad and isolated minority, otherwise if they are prevelant amongst the Toty party we will be doomed to more insufferable Labour Government who will be returned after a short interegnum of even more disasterous Tory misrule that will follow the ejection of the appalling Mr Brown.
What did we do in the UK to deserve the whole shower.
Got round to doing an average of Populus polls for 2008 running from Jan to Jan with Sept missing because of the conference polls.
As with YouGov the averages, modes and medians are all almost identical, as are the final figures.
Lab 34%, Tory 15%, LibDem 12%, SNP 36%, Other 3%.
The biggest difference is that over the year there was a lot more variation in the leads and the variation in party percentages. The lead between the SNP and Labour varied from the SNP 19% ahead to Labour 30% ahead.
The SNP vote varied from 44% to 24%, Labour from 50% to 24%, the Tories from 22% to 8% and the LibDems from 16% to 9%. Even the Others figure was from &% to O%.
So although I would say that you can’t go on any individual Populus result from Scotland over the year they probably give us a fair idea of what happened for 2008.
The SNP and Labour were neck and neck with Labour doing well with Browns recovery pulling ahead from October and the SNP even then polling more than the Tories and LibDems combined.
What has I think changed from previous years is that unlike the first two Holyrood terms now the polling figures for Holyrood and Westminster are now much more alike.
Peter.
Are we expecting any new year polls from Ipsos-MORI, ComRes or ICM any time soon? We had 5 polls by this point last year.
Oddjob,
To ‘M’ you replied;
“Your views are reflect a “nasty” tendency which is not only economically illiterate, but which also explains why everyone, including most decent conservative supporters hated so much about the last Conservative Government”.
I thought his views were based on logic as opposed to emotion.
One can throw a load of money (and therefore time and effort) at a few people who one feels sorry for and achieve very little at great expense to ease your consience but it is not therefore the ‘best’ thing to do.
Many people (indeed the majority of the electorate) realised this during the long period of Tory rule in the 80’s and early 90’s which is why they kept them in power!
Just because the BBC constantly bangs on about how bad it was under Thatcher doesn’t nessesarily make it so. The public grew tired of the Major government which was, most would agree, doubtless a great deal less ‘nasty’ than what came before.
I believe in equality of opportunity not absolute forced equality what is ‘nasty’ about that?
“I believe in equality of opportunity not absolute forced equality what is ‘nasty’ about that?”
Nothing as far as I can see Ivan. The problem is when people don’t see the difference.
Equality of opportunity is giving someone £10 and giving them a choice to flip a coin for double or nothing. Everyone has the opportunity to take £20, but not everyone will take it. Equality of outcome (which is what people like Mrs Harman seem to want to see) is the taking the coin away and removing the opportunity totally.
The view that ‘equality’ politicians have is that if you have 3 jobs and interview 6 black people and 3 white people, then you should give 2 jobs to black applicants and 1 to white, regardless of who is better at the job.
Anthony:
I’ve read you interesting piece on how you do your average. Very interesting, and much more sophisticated than my WMA (though we don’t disagree much about the result, mine has a CLead of 7 rather than 9). However:
a. It’s not necessarily true that averaging bad polls with a good one makes the result worse. It depends on whether the bad polls have a net systematic bias or not.
b. The only pollster that seems to have a systematic bias is BPIX whose mean result overstates the CLead by 2 points with a Std of 2. There is some suggestion that Ipsos/Mori tends to be a bit too pro-Labour, their mean error is -1 but their Std is 3.5 so this might just be random.
If BPIX did more polls (or I had more spare time) I might try to do a WMA that corrected for systematic bias. But a quick pilot on the last 10 polls shows that it wouldn’t make much difference – 0.1%
NBeale,
Lately I’ve been going with a swing analysis to form my electoral prediction. Seeing as Labour typically performs worse at a general election than polls suggest I’ve been looking at what the pollsters were saying before the 2005 election compared to what they are saying now, and using that swing to determine likely voting behaviour. Usually the overall result is a slight Conservative majority.
M:-
Very interesting post.
Thanks
Ivan
re your response to my comments on M’s contribution, I would tend to agree with your comments, other than the implication that they reflect my concern with what M said
for example he said
1. “Your error is in thinking there are policies that can “help us through” a recession.”
– It is economically illiterate to say that Governments cannot affect for better or worse the depth and duration of a recession
2. “Nobody can do anything about it by blowing money we dont have on incompetent companies and individuals.”
- to imply that all those who suffer unemployment or insolvency are incompetent displays is not only “nasty” but plainly displays a lack mof understanding of the real world.
Many of these people have been just as “hard working and responsible” as those who have managed to avoid this fate.
M’s perscription would certainly prolong and worsen any recession, but my core point was the language he uses and the underlying attitude that it displays.
and actually historically this sort of approach is even worse than wrong it is stupid because it is not carried through.
Conservative Governments continued (and would in the future) pay out, but recieve no credit because the begrudging language used just made them look churlish.
None of that is to say that there are not major problems with how benefits are delivered, or the efficiency of the public sector, but that is an entirely different story
Good polling news for the Conservatives tonight – this from PA:
The Tories have doubled their lead over Labour over the past month, according to an opinion poll tonight.
The YouGov poll for the Sunday Times put the Conservatives on 45%, up four points on last month, 13 points ahead of Labour who were down three on 32%. The Liberal Democrats were down one on 14%.
That compares with a six point Tory advantage last month and represents the biggest lead for the Conservatives in a YouGov poll since early October.
The findings provide further evidence that Labour’s “Brown bounce” – which saw it rise in the polls in response to the Prime Minister’s handling of the financial crisis – is now over.
:: YouGov interviewed 2,077 adults online, across Britain, on January 15 and 16.
There is no doubt that the recession is global.. My question is how the length and depth of it is caused by Gordon Brown’s incompetent management of the country’s economy. That it has been mismanaged and built on smoke, mirrors and some pure luck must be pretty obvious to even the most naive labour supporter.