New MORI Poll

Ipsos Mori have released a new poll conducted on behalf of Unison. Like ICM’s poll last night, it’s something of a return to normality after the extremes of last month. The topline figures, with changes from MORI’s last poll, are CON 39% (-1), LAB 25% (+7), LDEM 19% (+1) (the previous poll, you may remember, showed Labour way down at only 18%)

The poll included a booster sample of public sector workers allowing MORI to better gauge public sector voting intentions – there support stood at CON 32%, LAB 29%, LDEM 19%. An idea I often see expressed is the public sector employees constitute a “payroll vote” who monolithically vote Labour. It’s not true – public sector employees are more likely to vote Labour, but as this shows, it’s not some sort of guaranteed block vote – at present the Conservatives even have a narrow lead.

113 Responses to “New MORI Poll”

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  1. @Steve Cooper – I vaguely recall your post, but it struck me then, as now, that the outlook was exceptionally grim, and I think Darling was probably being honest in calling it as he saw it, rather than needing to exaggerate for future political gain. However, you’re absolutely right that Labour will be looking to hammer home the ‘worst global recession’ message. What people need to honestly assess is whether, if the outlook really was that grim, Labour policies have helped alleviate the worst, and at what future cost. When you get Nobel prize winning economists like Krugman speaking about government actions in such an admiring manner, we really need to start thinking about these things. I honestly believe that if the expenses row had never happened Cameron and Osborne would be under pressure in the polls and there would be real talk of an election in the Autumn.
    Reaction to the expenses row has unfairly penalised Labour, more as a reflection on a government that looks generally tired than for any logical reason. Even here though, there are increasing questions over Cameron’s lack of real action. Anything can happen, but I don’t think it’s over yet.

  2. @James Ludlow – Firstly – please don’t assume I’m a Labour supporter – I’m not. The point I’m making is that the markets expected a much higher claimant count increase. Some were predicting this unemployment level by Christmas, but as with home reposessions, for whatever reason these rises are lower than market predictions. This matters for two reasons; 1) Government credibility and 2) Public finances. If the recession in the UK is shallower and shorter than most other developed nations, which at present is an increasing chance, it matters an awful lot for the judgement at the next election.

    What I would say, is that even if the economic numbers run in Labour’s favour, it isn’t necessarily enough to make a big dfference. Brown’s fundamental presentational dishonesty is a real problem for them in building credibility, and currently the judgement appears to be from too many people than Labour cannot be trusted. That could change, but if it doesn’t those people will not give credit to Labour even if the economy responds well.

  3. @Wayne – don’t get so excited. The first point is a political one, in that the next government will be making some tough calls and they will be unpopular. Whoever is in power will want a big a mandate as they can get. The second point is that at 39% now, they may not get to power. Who knows?
    Incidentally, the Boundary Commission decide constituencies. Labour were better organised at the hearings than the Tories, and you comments might be taken to be libellous on this one, although I’m sure no one will be that bothered.

  4. @ Alec, The first point is fact and you think Labour are going to get a big mandate they didn’t in 2005 did they and unless the conservative party are exterminated Labour won’t get one either !
    What are you banging on about my comments being taken as libellous ……. What are you Rumpole of The Bailey !

  5. @Wayne – As your post as disappeared it may be that AW agrees with my assessment.
    Labour didn’t get a big mandate in 2005, but for many reasons, not least expectations, Cameron would dearly love one this time. And I don’t think Labour get a big win, if any win, either. I’m just making a point about the current level of Tory support and that it may be a little more fragile than it was 3 months ago.

  6. I’ve analysed all polls in 2009 by calendar month of publication (so not necessarily fieldwork). The average Tory lead on a simple unweighted average of the polls shows:

    June to date 14.4
    May 16.6
    Apr 14.9
    Mar 11.8
    Feb 13.7
    Jan 11.4

    One is struck by the overall consistency. Some small evidence of the Tories benefiting from the expense scandal in May but it doesn’t seem to have lasted, and there is absolutely no trace of any post-Euro/local election boost. Similarly, you’d never know from these figures that Brown was feted by (some) world leaders at the G20 summit in April. I can’t think of anything special to explain the boost in February but it was apparently short-lived.

    If the exceptional circumstances of May are excluded, there appears to be a gradual consolidation of the Tory lead from 11 to 14% over the last five and half months. If Brown has passed his nadir – which seems possible given that the media have lost interest for the time being in putting his lugubrious face on every front page – then it may be that there is an equally leisurely decline in the lead back to around 11% by the end of the year.

    Unless Labour can do something game-changing around their conference, like getting rid of Brown, there appears to be no prospect of an election this year and a projected Tory majority in the high thirties (seats not votes) by December.

    Of course, all this could be nonsense!

  7. Alec,

    Best to end the tittle tattle and wait for the GE result !

  8. Anthony,

    Are we expecting any more polls over the next few days or weekend ?


  9. Alec,

    In general I agree with much of what you say. We do however need to be careful as to how the public may perceive financial / economic data and what impact, if any, this has on their assessment of the Parties / Leaders and their policy proposals when the GE is finally called.

    Recent data suggests that the economy may be levelling out, but it is far too soon to say whether we have really turned the corner or this is merely a pause before resuming the downward trend. We should also be alert to the danger of a double dip – it has happened more often than not when there has been a systemic / global shock as opposed to “normal” cyclical fluctuation. [oops, I forgot, the normal boom and bust cycle has been abolished hasn’t it. So presumably only exceptional patterns can occur – which makes a double-dip even more likely.]

    As to where the polls are likely to go from here until May next year – who knows ? But the current position and recent track record suggests that it is Labour who have the bigger mountain to climb not Conservatives.

    Undoubtedly Cameron would prefer the polls to give him support at +/- 45% than 38-40%. His original target back in 2005 was 43%. But the key number he will be looking at is 326 – the number of MPs required to have a Commons majority.

    Only once that hurdle is passed will he become concerned as to either the size of his majority or the actual share of the vote achieved. In any case, these figures are not directly linked since it depends on what happens to the Labour vote.

    Which gives him the stronger mandate ?

    C 42; Lab 36 and a majority below 20 or
    C 38; Lab 24 and a majority over 100 ?

    There is no magic figure, but obviously the greater the majority the more the more confident the government will be about being able to take difficult decisions.

  10. “Alec – Today’s unemployment figures are further evidence of this possibility, with the rise much lower than expect. ”

    Alec, March’s rise was a bit lower than expected which is good news for those of us looking for work. Public sector job creation is still there, which would tend to indicate that the private sector is sheding jobs at a higher rate than the overall figures would tend to suggest. This could shift the public sector v private sector debate more towards the cuts argument along the lines of “Why should the public sector not take some of the pain?” It isn’t something easy to articulate, but it could be a subsconsious theme. In the end, both sides of the argument have difficulties with this – Brown is not being believed, but the cuts argument will resonate with some of the soft Tory supporters. This is a real challenge for the party leaders. I think this could be fascinating in terms of their individual poll ratings as well as the overall party figures.

  11. @ Alec – fair enough.

    I think the unemployment figures are going to look even more unpleasant next month as graduates try to enter the workforce. Not something I’m gloating about, in case I’m giving the wrong impression here.

  12. Neil M, just for clarity by margin of error I am not referring about polling numbers but about the Cons margin for making errors.
    As others have said 40% is fine but at that level they can’t afford to be losing many votes for whatever reason.

  13. I just don’t understand this government.

    It announces an Iraq enqiry in camera -& everyone clamours for a public enquiry.

    It says Darling’s last Budget shows no cuts in Public Expenditure after 2011-& all the experts say it does.

    It says the structure of the Banking Industry & it’s regulation needs no changes-& the BoE Governer says they do , whilst Obama publishes plans to implement such.

    Has Brown got some sort of death wish-or does he really believe he is the only person who is correct on these issues?

  14. There is a 80% probability that to with 1% the recent polls show the reality to be Cons 40%, Lab 23.5%, Lib Dems 19%.

    Sorry, but I do not have the patience to explain my long worked on methodolgy – it would be labourious to explain, and even more labourious to defend from criticisms that might come from those who are intellectually narrow and shallow minded.

  15. @Matt,

    I think you are spot on with some of your comments about public sector workers. I am one (albeit in a profession that probably always shades Tory – I’ll leave you to guess..). The amount of public money that leaks out of my organisation is breathtaking. Sometimes I think about how we have just spent the entire tax-take from a dozen average waged UK workers on some pointless, ill-thought out stab in the dark and it makes me fume. I have always felt that the public sector has an absolute, overriding moral obligation to spend as little money as we can, but that is just not the culture. The siren call is always “if we don’t spend it, some other department will”..

  16. @James Ludlow – you’re probably right. Peace breaks out.

    @Colin – I absolutely agree with your last post. What I have been saying on the poll and economic numbers is that there may be a chance for Brown to pull off a remarkable victory, but he would really need to work for it, and get some luck. I would draw the parallel with a footbal team in the relegation zone that needs to win its last three matches plus have other results work in their favour. But after all the clamour for change, to have Brown base the Iraq enquiry on a model used in 1984, with an arch establishment figure already discredited in many people’s minds for his role in the Butler review is, as you say, some kind of death wish. All your other points are equally valid.

    As I have said previously, to have any chance of survival Brown needs to get seriously honest, go radical, and seize any chance that might come his way, but I’m not holding my breath. I’ve been waiting for grown up politics for, well, all my grown up life. Right now I expect to have to wait a good deal longer.

  17. @paul H-J
    The double dip scenario seems very possible to me, considering a leap in inflation could be just around the corner driven by higher oil prices once global demand picks up (remember pre-recession price trends) and also the possible consequences of quantitative easing. This would, I believe, kill any recovery stone dead and along with it any chance of a recovery in Labour fortunes

  18. Somebody told me a story a few years ago that he knew of a terribly inefficient factory in West London that was beset by union problems and was being subsidised by the government.
    Yet within literally a few days of effectively winning the February 1974 election, Labour closed it down.

  19. Looking at the graph of the moving averages over the last 5 years, until the expenses scandal broke the Labour and Conservative votes appear to have consistently mirrored each other around the 35% line. One goes up, the other goes down. The symmetricity is striking.

    Then expenses hit and their shares of the vote appear to have been acting in tandem since – ie both plummeting for weeks, with even a matched recovery in the last week or so.

    @Leslie calculated the movement this year in the Conservative lead over Labour (which has been pretty consistent). What really interests me is the gap between Labour and the Lib Dems, because I believe that if Labour suffer one more big blunder and even begin to average below the Lib Dems then that is game-changing.

    This is what I make the average leads in every poll published in each month this year of Labour over the Lib Dems –

    Jan 18.4
    Feb 10.9
    Mar 12.7
    Apr 9.9
    May 4.1
    Jun (to date) 4.7…

    That’s quite some drop.

  20. @Steve Cooper – the double dip could well happen, not least as the current pick up is partly based on restocking inventories. The inflation issue could be a problem, although we need to remember that capacity is under utilised so there will be limited price pressures here at least. Oil is the more likely candidate, but Opec have signalled their desire for stable prices. One other point to consider is the positive benefit of a small dose of inflation. It’s generally a bad thing, but with very high debt ratio’s at household, company and national level, a period of old fashion inflation helps to bring debt as a proportion of income down. Its not advisable to pursue this as an effective policy, and I don’t want to overstate the benefits, but a little inflation, for a short period, would probably not do the economy a great deal of harm.

  21. As I understand it the trick with ‘helpful’ inflation is for the Gov’t to have long term fixed interest rates debt at low interest rates before inflation rises and therefore interest rates.
    If the Gov’t have to go to market excessively during the inflationay period with are in even deeper doo doo.Get this right, though, and debt as %age of GDP could come down a lot quicker than forecast.
    I guess Money market attitudes to Gilts and Gov’t debt are so crucial to this possibility as if only short term money can be raised this scenario is not possible.

  22. Alec & Jim Jam

    The concept of “helpful” inflation is dishonest. It is merely a mechanism to rob savers in order to reduce the pain for those who are over-borrowed.

    Older people – who tend to be savers rather than borrowers – know this from bitter experience – which may explain why people tend to drift towards conservative values as they age.

    The problem for governments trying to manage national debt through the gilt markets is that their buyers are more sophisticated, and they can no longer rely on plundering the savings of grannies who might thus lose their blouses.

    The government needs to focus on reducing spending in order to live within its means. That would be “prudent”. To pretend that we could somehow keep spending by borrowing then using inflation to reduce the value of the debt is downright dishonest – and dangerous for the health of the economy.

    Even if Brown does not appear to understand this, teh public have twigged.

  23. Some of todays headlines;

    “British deficit soars to $18.8 bln in May -Public borrowing at record levels ”

    “Retail sales suffer surprise slump in May ”

    “UK jobless total at 12-year high”

    “Mortgage lending falls back again- CML”

    I don’t think we’ll see a good level of sustained optimism until such headlines stop coming. I reckon another 6-12 months untill that happens. At which time inflation will have begun to rise and, no matter how kindly it’s ‘spun’, Labour have consistently linked that to the ‘bad days of Thatcher’ so it will hurt them.

    More expenses stuff out today too. I don’t think the polls are worth anything while that’s still up in the air. A couple of months before we can can really see where the publics mind is I reckon.

  24. Paul HJ – what you say is only true if real interest rates are negative as last happened for any lenght of time under Thatcher/Howe after the big VAT rise (my recollection may be wrog)
    Normally part of bringing inflation down again is encouraging savings so real interst rates stay positive even a higher than normal.
    I agree though it is a dishonest way of working and extremely risky.
    Agree with Ivan need 2 months min, maybe even conferences out of way before we have a clear picture.
    We can still have some fun on here in the meantime – esp with the Bye – Elections.

  25. @Wes. Interesting analysis of the Lab-LD gap. It does seem surprising that such a precipitate growth in this has not been reflected in a comparable widening of the Tory-Lab gap, especially as it has arisen more from a reduction in Labour support than a growth in LD support. The explanation seems to be the growth in “other” support and this may still prove to be the wild card in any general election – either people returning to their original fold or continuing to support the minor parties.

    I suspect that the next GE will be the most difficult to call in a generation and the opinion polling in the run-up to the election may be less of a guide to the outcome than in normal years – even if the share split is accurately forecast, its translation into seats won and lost may prove much more unpredictable.

  26. Sorry, that should be “precipitate narrowing” in the second sentence.

  27. @Ivan – you are right to point out contradictory signals. We’ll be in this situation for some time I think, and as I earlier said, whatever the broad economic numbers, its the impact on public debt that is the key and this is the hardest to forecats with any accuracy. An awful lot will depend on global circumstances, but here there is more encouraging news from China and the US, but its very much up in the air how quickly better news will feed through.

  28. @ WES

    That moving polling average of labour over liberal is quite startling when you see it. But naturally I would caution that the political map has changed to be quite different in Scotland; where the liberals have fallen alongside labour (because of the deeply unpopular labour-liberal executive for 8 years).

    So just to point out that those figures are presumably UK wide, and therefre not all that relevant to the Scottish case, nor the Welsh one either (given the euro results from there).

  29. Dean – quite right. UK figures. Though needless to say that would suggest it’s narrowed even more outside of Scotland.

  30. Wes,

    The real issue for LDs is that, whatever the gap between Lab and LD, there are very few Lab / LD battleground seats. This is because, unlike Con, neither party has its support evenly spread around England.

    What is happening is that LDs are progressively replacing Lab as the opposition (or main alternative) to Con throughout large parts of England (different positions apply in Scotland and Wales). That was graphically demonstrated in the County Council elections where the ward maps show a sea of blue with patches of yellow and only pinpricks of red.

    In northern urban areas – but not London – LDs have attempted to position themselves as the alternative to Lab, taking advantage of Tory weakness in these regions in recent years. That has delivered considerable success in local councils, but begs a question of consistency. It also puts LDs at a risk of being squeezed in event of a close national election in a way which does not apply in rural England.

    The political reality is that at the next election it will be difficult for LDs to win seats direct from Lab, while they will be hard pressed to defend what they hold aginst Con. But, at the election thereafter, while they will still struggle to win seats from Lab, they may be in a good position to win from Con many seats which were only marginally taken from Lab in 2010.

    The one strategic exception which may assist LDs in 2010 is Tactical Voting to despatch Lab MPs. This will in effect be the reverse of what happened in 1997. But the problem for LDs is that unwinding of past anti-Tory tactical voting could cost them a large number of their current MPs.

  31. Hi Paul – I agree with much of your analysis, but I think the LDs’ biggest problem remains the fact that large numbers of people simply don’t take them seriously. If they’re seen to be polling above Labour nationally with any degree of consistency (a big if, of course, but they’re much closer to it now than at any time I can remember) – if that were to happen then I think that the charge of being a “wasted vote” would cease to have the same kind of credibility and that they could start to punch higher in all kinds of places where you might not currently expect them to have a sniff of a challenge.

    The evidence that national polling can have an impact in this way, in places where the figures should actually not be relevant, is borne out by the fact that one frequently hears this charge of a LD vote being a wasted vote *even here in Somerset* where they’ve regularly place first or second in elections for years. It would also of course be very damaging for Labour to be regularly polling third. Like I say a big ‘if’ but on recent trends not unthinkable.

  32. I would have thought the LDs must be pretty disappointed not to have done a lot better over recent weeks.

  33. Agree with that too.

  34. The problem for them is Clegg; I like him myself but given his contributins to in the ‘Orange Book’ his natural political territory is probably akin to being a centre-right liberal (economically) with a merely centralist social agenda. Hardly attractve to Labour voters on the centre left on both counts.

    But Clegg is qualified to hold ground against Conservative challenges; thats presumably why he was chsenoer the more leftist Chris Hune.

    But just to mention, the Liberals managed to sustain their net total councillors in England for example, despite loosing ground in the South West to the Cons. Might this not be at least an indication that the picture Paul paints of a Liberal boat sinking is not perhaps the whole story? (again the Scots and Welsh cases excluded).

  35. Indeed the LibDems never seem to get very far no matter what they do or what happens elsewhere. By recasting themselves as a generally centrist party, they are losing the protest votes which seem to be going to rather more unusual and less mainstream parties. And, it is not as if we are short of quasi-centrist parties right now, which will happily take those floating voters who don’t want to float too far.

    Perhaps someone will invade iraq again, and then they’ll be getting somewhere again.

  36. @Alec

    Your concept of “helpful inflation” with government debt is utter tripe. Once a country gets a reputation for doing this, the markets demand higher interest is paid on government debt for decades. Why do you think that the interest rate on British debt was higher than interest rate on German debt (adjusting both for inflation & currency expectations)? Because the markets trusted the German government! The Tories built a reputation for controlling inflation, and the *early* years of New Labour continued that impression, so the premium the UK had to pay was continuing to drop. [snipped…]

  37. Dean,

    If you reread my analysis, you will see that far from suggesting that the LD boat is sinking, I have set out a course which would allow it to emerge much strengthened in 5-10 years time. However, to do so, it requires courage and the ability to withstand some pain in the short term. That needs strong and clear leadership.

    I pass no comment on the current LD leadership, but one dififculty the party does face is that very few of its MPs have won their seats from Labour. They have plenty of experience in appealing to pale blue voters, but not very much in appealing to pale pink. Yet those are the votes they need if they ever hope to replace Labour.

    Much time was wasted in the past ten years imagining that they could somehow replace the Conservatives as the opposition to Labour – yet their track record on the ground in local councils throughout southern England shows clearly that they can replace Labour and assimilate their support on a semi-permanent basis.

    In Scotland, the LDs became too close to Labour without offering any appeal to fiscal or social conservatives. Salmond, who is not a socialist, gratefully mopped up those votes where he could. So, yes, in contrast to England, the LD boat is sunk north of the border.

  38. Jim-Jam

    Real interest rates are negative at present. Moreover, for savers, it is not the headline rate that they need to consider, but the effective rate which they receive (after tax). At present, the return is practically nil, even before taking into account the adverse impact of asset price deflation on non-cash savings, while, despite offical figures, the things on which older people spend a larger portion of their income are rising rapidly..

    Previous governments have taken sensible measures to promote saving and so support the investment in new business the country needs.

    This government, by its statements and policies, seems intent on promoting consumption at all costs.
    At the same time, we can now see more clearly the long-term effects of Brown’s wanton attacks on savings and investments in the early part of his Chancellorship. Money plundered from savers and investors then wasted through profligate spending on unreformed public sector entities (I refuse to use the word “services” here.

    Finally, to rub salt in the wound. Those who have been prudent and built up savings, have this held against them when applying for local care support, while the idle and irresponible receive hand-outs without question.

    Many of the people most damaged by these policies were traditional Labour voters. That is why Labour has seen widespread disillusion in its former heartlands. How that will play out electorally at the next GE is, in my view, a big unknown.

  39. Having grappled with the Lib (now LD) stategic problems professionally during the 80s, most of the analysis I read by Paul H-J is correct. However, there are certain key factors that I have not seen mentioned. In those days we deduced that a LD/Con marginal seat is easier to hold during a pro-Tory year when historically the combined Lib/Lab vote was together significantly more than 40% despite it regularly previously being held by a Conservative. Where the LDs have gained a classic Tory seat where in the old days (50s-70s) the Tories polled more than 60% they are devilishly difficult to hold for more than a couple of GEs (e.g. Orpington, and more recently Newbury etc.). Where there is a significant anti-Tory tradition they are much easier to hold. Of course there are other variables, but the long term history of seat behaviour, social composition and traditions is a factor than can tip tight fights either way.
    I agree the LDs must be worried a little not to have made better headway. However, they are probably relying upon Clegg, and more importantly Cable, faring well during the GE campaign itself. I suspect they will have a rum time holding off the Tories in seats where there is no further Labour vote to be squeezed to compensate for the “National Liberal” (I use the description classically, not the new neo-Pujadist group registered with the Electoral Commission who have stolen the label!) types returning to the Conservatives, because unlike the previous leaders since Major, Cameron is acceptable to them. However, Cleggs own centre-right views might mtigate this a little if he can get his message across convincingly during the campaign.
    As I have said before the size of the LD parliamentary party is very difficult to predict, and the size of it could make all the difference in the world to who wins No.10 in 2010.

  40. Cynorgies, you are right of course but I do seem to recall Lawson’s Blip produced CPI over 10% before erm discipline kicked in.
    So it was only 5-7yrs of Tory good work and 9 of Labour.
    Fair enough re Interest rates Paul when taking tax in to account but the asset value piece (ie houses) does not really apply to old people very few of whom will have moved to a bigger house in the last 3 years.
    Also (and this in not just spin) poorer pensioners along with low earners with kids have been the biggest gainers of transfer payments under labour financially.
    The issue is the self reliant but not rich grouip who don’t get the benefits but are not wealthy enough to not worry about less income and get hit by Council tax and other rises.
    Most of these have gained massively from house porice inflation, though, and have made oodles from downsizing as they get older, that is why there was an IHT debate in the first place.
    So pensioners are not a group who need too much sympathy in general.
    Not sure what the ‘ money plundered from savings and investors’ is about’ unless you mean tax on dividends policy which is not universally condemned but this is too big a debate for here probably.

  41. “The Tories built a reputation for controlling inflation,”

    A thoroughly partisan post, but hey it’s a pro-Tory one.

    Of course the electorate might well forget the high inflation, high unemployment, high interest rates success story of former Conservative Governments.

    It remains to be seen how the inflation graph look in a couple of years from now (assuming Darling’s policies are implemented). I would have thought, given the Tory line that they would spend about the same as Labour, that there wouldn’t be much difference. Whoever gets in is going to have to control inflation by “quantative tightening” and raising interest rates.

    The likelihood of a return to the inflation rates of the eighties and early nineties is quite slim. However, an antagonistic approach to industrial relations (cf Boris and Crowe) and pay round negotiations might well lead to higher pay claims, strikes, lower growth,high inflation and misery all round.

  42. Cyno – i do agree with you re “helpful inflation” though – there’s no such thing.

  43. Jim jam,

    The main financial asset holding of most people at or near pensionable age is not, surprisingly enough, the equity in their main home, but the cumulative value of their pension funds – whether personal, group contribution based or final salary scheme – the vast majority of which is invested in equities of one sort or another – however indirectly they may be held.

    Many younger people are unaware of this – which is how Brown was able to clobber pension and savings funds with impunity in 1997-99, and then deny the long-term effects ever since.

    While accountants argue over the IFRS effect on fund valuations, the underlying reason why our country’s pension funds moved from massive surplus in the 1990s to massive deficits since 2000 are ultimately down to the fiscal changes made in 1997-99 – including windfall taxes and PRT as well as Brown’s only “tax cut” – the abolition of ACT (yes he really did try spin it as a tax cut). Not only did this reduce the income of these funds, it also reduced the cash available for productive investmnet (as opposed to government spending programmes) which has undermined the long-term productivity of teh economy.

    Whenever these effects are explained to an impending pensioner coming to grips with a pension income way below their expectations, the anger is palpable. And pensioners vote – however much you may feel them unworthy of sympathy.

    Oh, and on the question of moving, those who have already traded down will be pleased as pie. But what about those who had been banking on selling their house for a fortune in the next five years in order to fund their retirement ?

    It is an axiom of government that the law of unintended consequences can produce outcomes very different from those desired. But when the government either fails to properly assess potential consequences – or as has frequently been alleged in respect of the former chancellor – ignores advice as to what those consequences might be – we should not be surprised if government action produces unwelcome results.

  44. John TT,

    “I would have thought, given the Tory line that they would spend about the same as Labour…”

    Of course we all know they won’t/wouldn’t though don’t we?!

  45. Yes Ivan-in fact they have said that they will spend less.

  46. Which is why the current spat is so strange. Of course they would cut harder, so why not just come out and say so?

    And on the other (Labour) hand, why on earth not just come out and say “we’ll cut less than you” or “we’ll cut because wwe have to, but you’ll cut because you want to”?

  47. John TT

    “And on the other (Labour) hand, why on earth not just come out and say “we’ll cut less than you” or “we’ll cut because wwe have to, but you’ll cut because you want to”?”

    Little chance of that level of honesty – mainly because the principal reason why cuts are needed is because Labour have consistently overspent / mis-spent. Admiting to the need for cutting spending is taking honesty just that little bit too far !

  48. When ACT existed many poorly performing companies paid a dividend that was disproprotionate in other to boost their share price.
    Marks and Spencers did it for years when they were declining.
    Abolishing ACT took away this trick as it made share value growth through growing a business profitably the main vehicle for pension fund growth.
    It was only when the stock market crash occurred that shortfalls appeared.
    Share values have fallen by as much in the US and Japan (more infact) as here so ACT abolishioncan not be blamed.
    Of course ACT was very regressive as the more you earn in general the greater your pension contribution and therefore dividends,
    It was one of the few properly redistributive measures taken by New Labour, no wonder Tories don’t like it.
    As for windfall tax well that is another debate around saving unemployment benefit and taxes later etc.

  49. @John TT

    “Of course the electorate might well forget the high inflation, high unemployment, high interest rates success story of former Conservative Governments.” — A very odd way to describe the change from the disaster they inherited from Labour in 1979 to the 4th most competitive economy in the world which Brown inherited from the Tories.

    However, ignoring your partisan jibe about a fictitious past, lets look towards the imminent future. With Labour’s debt now on watch for rating downgrade, we have already seen the interest rate premium we pay to borrow increase. It is likely (I put it at about 70%) that we will see a formal downgrade before the autumn statement, and this is likely to add another 75 basis points to government borrowing costs. So, yes, Brown’s idiocy will penalise the country before any election takes place. Much of the damage will occur before any election. We don’t need to look years ahead for rising interest rates, just until Moody’s or S&P downgrades Brown’s borrowing.

    Re quantitative “easing” – We are seeing an increasing amount of round-tripping – banks buying debt and then selling it back to the government through the quantitative easing window. They take a few b.p. turn in the deal, and the net effect is the BofE buys the government debt. It may (on paper) allow the government to claim it can fund the debt, but has no beneficial effects for the economy.

    Re “beneficial inflation”. Because there is a psychological resistance to being forced to drop a price, there is an economic argument that a small amount of inflation should be tolerated to allow relative prices to adjust more easily. However, an inflation rate of less than 2% p.a. has proved successful to achieve this in Germany, the Netherlands, Austria, Switzerland. So I wouldn’t go as far as saying there is no “helpful inflation”, but I would say that increasing inflation to devalue debt has the logical consequence that you have to pay a risk premium to investors which (over the course of time) costs far more than the transient benefit obtained.

  50. ““we’ll cut because wwe have to, but you’ll cut because you want to”?”

    Don’t think they would say that because it would immediately be categorised as another meaningless piece of Labour jargon.

    The Times today has an eyewateringly frightening analysis of the May public sector finance figures.
    They indicate borrowing figures for this year of £200bn-£25bn worse than Treasury last forecast.

    Talk of “we’ll cut less than you” is moronic-what we need is an honest discussion of the emerging realistic borrowing figures & the debt reduction timetable most likely to appeal to our creditors.

    That much should almost be non-political & could be laid out by any reputable independent body.

    The politics should be about choice of options to implement that cash flow plan.

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