Tomorrow we have some actual proper elections to look at – three by-elections, the new Police and Crime Commissioners across Wales and most of England, plus the Bristol mayoral election and the normal local government by-elections.

The three Parliamentary by-elections are the two caused by the resignation of veteran Labour MPs to contest the police elections (Alun Michael in Cardiff South and Penarth and Tony Lloyd in Manchester Central) and one in Corby caused by the resignation of Louise Mensch to go and live in the USA. The first two are safe Labour seats that promise little of interest – there is no obvious prospect of any upset and both will be easily held by Labour. The Corby by-election is more interesting, but just as easily predictable – the Conservative majority at the last election was only 3.6%, so with current national opinion polls showing a swing to Labour of around 9% they will win Corby at a stroll. If Corby behaves in line with national polling Labour should win with a majority of around 15%, in fact the polling of the seat commissioned by Lord Ashcroft suggests they will do even better than that, showing a Labour lead of 22 points.

The police elections are far less predictable. The elections take place in all English and Welsh police forces outside London, with each force electing a Police and Crime Commissioner using the Supplemental vote system (the same system used in the London mayoral election – you get a first and a second preference vote, if no candidate gets 50% on the first round all but the top two candidates are eliminated and the second preferences of people who voted for eliminated candidates are redistributed).

As I write there has not been any substantial polling of voting intentions in the police elections – there was a MORI poll that briefly asked about it, but given only around 150 people in the sample said they were certain to vote it won’t tell us much. Under normal circumstances we should expect Labour to do very well in the elections – it is a mid-term vote for positions that people don’t really understand, a perfect opportunity for a protest vote. On Thursday we have several unknowns – first is the extent to which people vote on the issue of crime, where the Conservatives have a traditional advantage. Second is the impact of the Liberal Democrats only contesting some seats. Third is the impact of independent candidates – you regularly get polls showing people like the idea of independent candidates, but in Parliamentary elections they invariably don’t vote for them. We shall see if people do end up voting in substantial numbers for non-party candidates.

Finally, there is the issue of turnout – both how it affects the results, and on the turnout figure itself. A lot of the media discussion in advance of the elections has been about how low turnout will be, whether it will be lower than the 23% recorded in the 1999 European elections, whether it will be as low as the 18% the Electoral Reform Society predicted. There have been a couple of polls asking whether people are likely to vote which have shown between 15% and 28% of people saying they are certain to vote, but don’t pay too much attention to that: turnout is remarkably difficult to predict from opinion polls (partly because the registers they use to work out turnout are not accurate in themselves, mostly because people tend to grossly overestimate their likelihood to vote – responses to the British Election Study are cross-checked against the marked electoral register to see if people actually did vote, and even amongst those people who say they are 10/10 certain to vote a good twenty percent don’t seem to actually do so.

Only Wiltshire police commissioner and the two safe Labour by-elections are counting overnight. Corby and all the other police elections are counting during the day on Friday, with the first results expected to turn up around lunchtime.


115 Responses to “Thursday’s elections”

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  1. “Con Majority – 29” should read “Con Majority – 29 (nc)”

  2. RiN

    @”I wonder when Greece will get it debt to 120% of GDP?”

    When it’s creditors write of most of their debt.

    The country is a basket case-bust.

    How much of that debt is “structural” -most of it?

    They spent too much for the tax they are prepared to pay.

    I wouldn’t lend them another cent.

  3. Colin

    Looks like you caught up at last, I’ve been saying for years that the debt would have to be written off. Unfortunately most of the Greek debt is now owned by the ECB who nice chaps that they are paid the banks face value, and now they are saying that the can not and will not take a haircut. Of course this is nonsense the ECB will get a crew cut whether they like it or not, they were fools to buy the debt at par and impose the austerity on Greece. They were told it would end in tears!!!

  4. Colin

    I think writing off a whole country is dangerous. One of the criticisms os out bankruptcy laws is that they prevent the bankrupt from making a recovery quickly.

    I think debtors are being over-protected worldwide, probably because of the fear that the whole banking system would collapse if debts are written off. But really mass write off and perhaps letting some banks die with their debts might could have been managed earlier on. Maybe that could still happen.

    Surely that would be better than letting first Greece then Portugal, Italy, Spain and possibly even France sink because they have borrowed irresponsibly?

    In the end these are markets too and the squeeze is destroying GDP everywhere. Letting them sink would drag us down too.

  5. I think it is safe to say Lab lead dropped a little in the last 2 weeks or so at least on YG daily polls (cue a series of 12pt leads boosted by Corby perhaps).

    I will be watching the underlying polls closely. We anticipated the unwinding of conference boosts but I was hoping that a little of EMs improved ratings are held, we shall see.

    I would expect a higher turnout for the PCC Election in my part of town amongst parents of 4-11 year olds as my youngest’s school is closed for the day (around 400 kids affected) but at least the parents/carers are aware of the damn thing.

    I strikes me though that it is jumping the Levison enquiry to organise Elections to the PCC now!!

  6. I think Labour should have campaigned on a widespread “stop police privatisation” ticket (can I say ticket?).

    Give people a clear argument and then the Commissioners would have a mandate to stop local services being sold off to G4S etc

  7. RiN

    Yes I agree that ECB will lose money-ie EZ members who will indemnify it.

    Nick

    @” think debtors are being over-protected worldwide, probably because of the fear that the whole banking system would collapse if debts are written off.”

    Brings to mind an interesting section of the BoE qtrly report , featured in the Times today. Evidence of large numbers of “zombie” companies being kept afloat by banks who cannot/will not take the bad debt write down.

  8. JIM JAM

    @”I strikes me though that it is jumping the Levison enquiry to organise Elections to the PCC now!!”

    :-)

    …if you had said “Elections of P&CCs” , rather than “Elections to the PCC”-you would have avoided confusion .

  9. @Colin

    Indeed. I wonder if they are looking for folk at the Ipsa. I can’t imagine any MP being able to intimidate me. Well not if the wages are reasonable.

  10. stuart gregory

    “live with it”

    thanks for your advice

  11. Colin,

    ‘They spent too much for the tax they are prepared to pay.’

    All of them, the entirety of the Greek population, man women and child, or do you just mean the tax dogders?

    Most Greeks pay tax in the equivalent of PAYE and VAT.

    In fact Greece is being loaded with debts to keep zombie ‘investors’ afloat – the people whose money is then extended to ‘zombie’ companies amongst other things. All protecting each other from losses, avoiding market values like the plague.

    Rather than expose the debts, and the threat of a great unwind of fake asset values that could bring down the whole banking system and all the money and credit markets in the world, the Greek people are made to pay the losses. And the assets – while not being actually tradeable on an open and free market – magically retain their false values through zombie funding (QE) These assets should be marked to market, as they were in the boom years, and their true value exposed and losses taken just as the profits were.

    That’s the story everywhere, in fact. That’s why we have austerity and why the youth of Europe are being thrown on the scrapheap.

  12. mikems

    yep.

    And just to add insult, the “cure” is tax cuts for the rich and spending cuts for the poor.

  13. NickP

    The ‘cure’ is absurd on the face of it. I am amazed that obviously intelligent people allow themselves to be persuaded by it, but I understand they may have other reasons for this lack on intellectual rigour.

  14. Just to agree with Colin about one thing.

    The rich in Greece should be taxed and made to pay their way, exactly as they should here and in the States and across the western world. Obama’s balanced budget idea, where tax rises for the rich go alongside spending cuts seem fairer and more likely to work than the spending cuts and tax cuts for the rich approach here.

    Some sort of new approach to raising taxes is needed in Greece. At the moment though the prescription seems to be to just sell off everything and cut wages, pensions etc.

    I think the middle class everywhere might end up paying some more basic rate tax too. But in return they should retain services and universal benefits. The way we are going we’ll lose all those benefits and then taxes will have to rise anyway as other spending rises.

  15. My client has become aware in recent days of a number of attempts to smear and besmirch him by online bloggers and posters. The allegations concerned have caused my client and his family great distress, and have no basis in truth whatsoever.

    I can confirm that the person known as ‘Alec’ has never appeared on television with his shirt buttons undone, and has never engaged in the practice known as ‘coppering’ whether honest or otherwise.

    Any suggestion to the contrary will henceforth be viewed as a deliberate attempt to spread false and damaging information, and I have been instructed to take legal action against any individual or organisation that repeats these unfounded accusations.

  16. MIKEMS

    I disagree with your analysis of the Greek problem.

    I understand that ridiculous tax exemptions & special cases pervade the tax codes. Income is underdeclared routinely & these things apply across the piece -particularly amongst the “professional” classes.

    I have no doubt that there is also massive tax avoidance by the super rich .

    You omit to mention the bloated State SEctor with it’s privileged employment rules, people who get paid for not coming to work etc-not to mention the ludicrous list of State owned enterprises which eat cash & which no one in their right minds is going to buy.

  17. PCC turnout pretty poor in my village.

    Mostly crinkleys & crumblies-good for the Con candidate I assume?

  18. MIKEMS

    THis sort of picture is nearer the mark :-

    http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki

  19. @ Colin

    Greece is still in the top 10 of countries Brtis retire to. How long will this continue ? If I were in the Greek government, I would try to sell off huge chunks of land to foreign development companies to build retirement villages. If Greece can somehow manage to gain inward investment, it has a chance to recover. But they will have to make it a very attractive proposition.

    Nearer to home, I am actually thinking of voting in the PCC elections. Have not decided who to vote for. Labour or independent appear to be the best candidates going on their profiles, not party label. Both have decades of business experience, ex magistrates etc.

  20. Re Greece and debts in general, I think @NickP is generally correct on this – lenders have been over protected. It’s a tricky issue, as defaults lead to a loss of confidence in general among lenders, as well as seriously damaging their balance sheets, both of which would have potentially dramatic consequences on future lending and therefore growth. Saying debts need to be written off is therefore simply to say, but hard to achieve.

    I do think though, that the bailouts really should have been constructed far more cleverly that they have been, with gradual debt write off written into the plans. Where I suspect the big strategic mistake has been made is in the EZ bloc insisting that they would protect the currency, and doing this by insisting there would be no default. The conflation of currency protection (a perceived political requirement) with honouring all debts (a financial exercise) has effectively created the crisis.

    I’ve always thought that they should instead have decided to take all debt above around 40% of GDP and effectively default on this by converting it into long bonds (25 – 30 year maturity date) with minimal or no annual interest. Perhaps no interest for the first 5 years, then interest rates gradually being increased every 5 years as the debt deflates away. Perhaps you offer an incentive to debt holders so that if they write off a sum of debt, an equivalent sum then immediately starts to attract an interest payment.

    This wouldn’t be great news for the banks, as they would be holding large numbers of assets that would slowly be deflating away over three decades or so, but at least those assets would be 100% secure and they would avoid any fears of a sudden default shock. This would at least remove vast sums of bad debts from the books, which is really what is holding back interbank and bank to customer lending.

    Once the uncertainty is removed from the market, the real economy would start to grow, enabling them to make profit elsewhere. They would still be able to show these assets on their books, and therefore lend against them, and we would have a clearly understandable path to the unwinding of debt which doesn’t involve a massive shock default nor huge sacrifice to the innocent taxpayer.

    I’m sure there are problems with such a solution, but then I see the carnage being wrought by the current ‘solution’ and I wonder to myself what, if anything, could possibly be worse than the path chosen in places like Greece and Spain.

  21. @Colin – much of the Greek problems are self inflicted, I agree, and these issues need to be sorted out to avoid a repeat of the problems in the future, especially as they are locked into the EZ currency, meaning that markets cannot apply pressure on budgetary problems until it’s too late.

    The difficulty today however, is more fundamental than how the tax and spend system is organised. Even if these problems are addressed tomorrow, the amount of income that needs to be withdrawn from the economy to service and pay off the accumulated debts is so vast that the deflationary impacts would still prove counter productive. No matter that the tax collection system is sorted out – if the economy is deflating, you just end up taking the right amount of tax from a smaller and smaller economy.

    Any solution needs to be accompanied by these long term reforms, but on their own, the reforms are no longer enough.

  22. Colin,

    What has all that got to do with the massive amount of false asset values clogging up the world’s banking and credit systems?

    I know the standard right-wing arguments here and simply don’t accept that they even touch on the main problem – inflated asset values sinking the banking system, caused by globalised capital flows and unregulated markets. Instead of accepting the real value of these assets the owners have had governments load the public with debts instead, hoping that, over time, they will come back to life as the real economy takes the strain.

    You talked a lot about what QE is and isn’t and you even pointed out that it was about keeping asset values high by lowering gilt prices, so why can’t you join the dots?

    Would the world crisis have been avoided if Greece had had different economic policies and had difffernent leaders? No, of course not.

    Please address the arguments I am making. All the things you point at in Greece are partly the results of globalised capital, and its international bodies, such as the EU, IMF etc and the ‘pro-market’ changes they have demanded in Greece. Low taxes and removal of barriers to markets and capital movements have caused the budget problems in Greece as much as anything else.

    Not feckless Greeks and their lazy ways.

  23. @Alec

    Personally, I think the worst mistake made so far with Greece so far is the differential default on debts. Private lenders are effectively forced into writing off 70% of what they are owed, but for money owed to other EU governments the EU still expects them to pay back every penny.

    If I was a lender, this would put me right off lending to any of the PIIGS. The message the EU has given is that if there is a further partial default in Greece or a partial default in any other country, you will be taking the brunt of the losses. This now means that if there’s any prospect of a default in Italy or Spain, the interest rates could shoot through the roof very quickly.

    As long as the policy persists in the northern EZ that they will give their southern neighbours the bare minimum to prevent collapse and not a cent more, I can’t see and end to this crisis. Attempting to pass losses onto banks this way is only a very short-term fix with serious long-term implications.

  24. I have just seen someone who says he is “Alec’s solicitor”, touting for work on tv, clearly drunk and with both shirt AND trouser buttons undone.

    Disgraceful.

  25. @Chris NS – I would agree with you that the subsidiarity of private lending was a major mistake, forced by the Germans who have a pathological terror of anything resembling money printing or out and out bail outs.

    In the end though, it really is a simple extension of free market rules to pass on the losses to the lenders. Just as I might buy a product that turns out to be less valuable than I had hoped, banks lent money in the form of bonds, that are now worth much less than expected.

    Logically speaking, if banks were dim enough to lend money without doing their homework on the risks, that’s their own fault. I have no philosophical issue with lenders losing out in this way if debtors default. Next time they might be more careful with their lending, and in doing so they would impose a market discipline on reckless borrowers, preventing just such a crisis developing in the first place.

    The difficulty, which I think you and I agree on, is that a draconian default solution now does indeed carry long term implications.

    However, acting to try and prevent any such losses (whoever holds the bonds) is fundamentally acting against the free market. Ultimately the markets needs to set the value of the debts, with governments and institutions merely acting to make this adjustment as gradual and smooth as possible, to enable normal money market functions to continue.

    Instead, they have taken it upon themselves to dictate to the market what the values of debts should be, largely for their own political purposes, which is why I believe we are no nearer ending the crisis, and poor individuals in Spain are killing themselves as their homes are repossessed.

    ‘Markets’ are merely systems made up of millions of individual people, and the role of governments is to ensure these markets work for those people.

  26. I would hazard a guess that if interest rates in the UK were to go up to, say, 3 or 4% now, the property market would crash everywhere but central London and teh Banks with large UK property porfolios (especially mortgages) would be effectively insolvent and we would see even less lending to anyone.

    It’s a dangerous game to play, Austerity. Because there are no more rolls of the dice if it it fails.

    I would suggest that borrowing (or printing) to stimulate, ending job cuts and pay freezes in the public sector and getting houses and infrastructure built or shored up would be far better…because you can always cut spending later, if you want/need to.

  27. NickP

    ‘It’s a dangerous game to play, Austerity. Because there are no more rolls of the dice if it it fails.’

    Particularly if the public sector has already been sacrificed in a previous crisis.

    Let’s assume there is a recovery, what happens next time the banking system freezes up and there is no public wealth to absorb the losses?

  28. The Grauniad quotes somebody called Giles from the FT:

    “The cash management ministers have in mind is to reduce the government deficit now by raiding the surplus accumulating at the Bank of England under its quantitative easing programme ….

    If future borrowing was likely to be cheaper than current borrowing, this would be sensible, but the likelihood is that QE will be unwound when economic prospects are better and government bond yields higher than their current historic lows. If we assume that QE breaks even in a profit and loss sense – an optimistic assumption – the Treasury is proposing expensive borrowing in the future instead of cheap borrowing now. It is bad cash management and will harm Britain.”

    Is trying to clear the structural deficit using printed money when interest rates are historically low the maddest possible thing we could do, especially when we have no growth?

  29. Nick

    Don’t even talk about rates going up!!! What are you some kind of bank basher?

  30. @Rob S (and Martyn)

    Apologies for my misidentification and maybe, on reflection, I shouldn’t have attempted to unmask you anyway, although I hope you recognise it was done in a friendly and light hearted way. Maybe I’m a little bit more relaxed than some about personal identity, and I did post for a long time on this site under my full and real name until changing my colour background gave me a new moniker for some reason, but I respect those who wish to preserve their anonymity. On that basis I was wrong to speculate about your real identity and I duly apologise for attempting, albeit unsuccessfully, to do so.

  31. The private sector “lenders” which were forced to take a haircut were mainly speculative funds which had bought Greek debt cut price hoping to make large profits(most of them made profits but not as large as they hoped) they often bought credit default swaps as well, some of them were holding Greek debt to try and force a default and get big payouts on their swops. Isn’t the free market a wonderful thing, there is always a way to profit from other peoples misery!!! Most banks were able to unload the bulk of their loans to Greece on the ECB which was handy for them seeing as many of them were leveraged at more than 30 times, so taking even a small loss on their loans would have wiped them out

  32. @Alec

    I think the fundamental problem is that the Eurozone wants it both ways with the banks.

    I don’t have a problem with banks losing money as a result of risky lending. The higher interest you got is a premium for taking a risk. Rule one of risky trading: it’s risky.

    The trouble is that the EZ government are blaming the banks for lending recklessly to southern Europe whilst simultaneously blaming the banks for not recklessly lending now. There’s no two ways about it, lending to the PIIGS now is risky. No-one is going to willingly lend to a country and risk not getting their money back without a higher interest rate to justify the risk. And if they somehow do – that was exactly how we got into the mess in the first place. I really don’t want to do the 2009 banking crisis all over again.

    The only way out I can see is northern Europe biting the bullet and helping their southern neighbours even if it means a drop in their own living standards. Because at the moment they are close to expecting the banks to do something they are neither willing nor able to deliver. Unfortunately, politics is rendering the good neighbour solution impossible.

    In short, we’re running out of answers.

  33. @RiN

    Whether or not it served those lenders right to take a 70% loss is not important. The question is what future lenders make of it. It’s very easy to paint the lenders who lost out as the villains who deserved it, but much harder to persuade future lenders that they won’t be made into the villains who takes the loss next time.

    The very nature of a default, either partial or complete, is that previous promises are broken, so it’s now all down to a matter of trust. Ultimately, it doesn’t matter how many promises are made to future lenders that Italy or Spain won’t be treated like lenders to Greece, it’s whether the lenders trust them to keep their promises. And given the swiftness of many in the EU to blame their woes on anything but their own mistakes, there’s reasons to worry.

  34. Btw

    A lot of those credit default swaps(bets that Greece would default) were written by British banks. Strangely the write down of Greek debts was not classed as a credit event and our banks didn’t have to pay out mega bucks which would have killed them stone dead. Of course as always the derivative market is bigger than the real thing and the value of the credit default swops was 10 greater than the amount of Greek debt

  35. Chris

    I take your point entirely, however history has shown that lenders are often eager to lend to newly defaulted countries because they don’t have a debt overhang. Of course I disagree with the whole notion of govts paying private banks to print money for them, it seems utterly insane to me.

  36. The October retail sales figures are a bit of a shock, with a 0.8% slump (by volumes).

    This really does seem to confirm the general trend, and means that the retail growth seen in September has been wiped out, with a bit more of decline on top.

    So far this quarter, pretty much all the indicators have been heavily negative. A return to more modest growth was always expected after the +1% Q3 GDP estimate, but the reversal has been much sharper and swifter than anyone thought.

  37. Alec

    Of course the Debt is now at unsustainable levels.

    Greece fiddled their numbers ( with the help of Goldfilled Sacks) to get in, milked the system in EU largesse, low interest rates & ready credit, to run a bloated state & a taz shy population.

    Their current plight is no reason whatsoever to downgrade the importance of attempting to cut their cloth. Do you not think that if Greece showed any sign of implementing a tax regime which served the country, with civil servants willing & able to implement it, cut out corruption & state payroll excess-that it’s creditors would not respond?

    As it is the country looks incapable-worse, unwilling, to make these steps.

  38. @RiN

    One reform I think does need considering is changing the rules on credit swaps so that you can only use it as an actual insurance. I think it’s quite reasonable that lenders can take out insurance against bad debts to stabilise them if the worst comes to the worst, but I cannot see what benefit there is in betting money on a default when you don’t actually hold the debt yourself. The analogy would be taking out insurance against your neighbour’s house burning down.

    It’s a fair point that lenders have lent to newly defaulted countries, but that doesn’t help us at the moment because Spain and Italy aren’t newly defaulted countries, they still have their existing debt overhang in the equation. The only way this precedent might work is with a full or near-full default on debts, which would be completely uncharted territory (although, for Greece, that may still be the less bad option).

    “Of course I disagree with the whole notion of govts paying private banks to print money for them, it seems utterly insane to me.”

    There is one other option the ECB ought to consider, which is printing its own money. The price of this will be steep inflation, and inflating away the returns that lenders have on existing bonds will be a deterrent on future lending, but that may still be a less bad option than what we’re doing now.

    However, that again would require France and Germany willingly enduring the pain (in this case inflation) to help the south. Can’t see that being politically acceptable.

  39. MIKEMS

    @”What has all that got to do with the massive amount of false asset values clogging up the world’s banking and credit systems?”

    Nothing-I was responding to you on the plight of Greece.

    I don’t really buy the argument that there problem was forced on them by wicked bankers.

    PAUL CROFT

    I am a crinkley-but moving inexorably to crumblehood.

    I really am glad I don’t live in your part of the country-it seems to have become a mush of politically correct gratuitous vicarious offence taking .

    Ever tried Yorkshire Paul-it might broaden your horizons -or listen to Geoffrey on TMS

  40. RiN

    @”The private sector “lenders” which were forced to take a haircut were mainly speculative funds which had bought Greek debt cut price hoping to make large profits(most of them made profits but not as large as they hoped) ”

    That is true Richard.

    I hope they get hammered.

    It won’t make German taxpayers feel any better though , when they have to recompense ECB for it’s losses

    ALEC

    @”The October retail sales figures are a bit of a shock, with a 0.8% slump (by volumes). ”

    Yep-this looks like the zig zag MK talks about-more like a roller coaster.

    The one positive is employment.

  41. Colin:

    It is indeed true that no-one here has ever said “Good norning Mr. Crinkly” so possibly it is a bastion of political correctness [gone mad of course] in Barney. Which is nice.

    Is that what they do in Yorkshire?

    Its only five miles away so I shall be sure to check it out.

  42. Lord McA settling out of court with BBC today.

    His lawyers say they have a list of Tweeters & suggest they “come forward” before the lawyers come & get them.

    A few cycle clips being applied one imagines ?

  43. PAUL

    @”Is that what they do in Yorkshire?”

    When I were a lad they used to have much more inventive names for people from your area……….or indeed anywhere outside of Tyke Land.

    But it was ( were) a long time ago-so I expect they are nicer now :-)

  44. I don’t ‘get’ why people think that interest should be paid on the QE bonds. The government owns the bonds.

    It’s like me insisting that I pay interest to myself on the money which is in my sock drawer!
    8-)

  45. @ Colin

    His lawyers say they have a list of Tweeters & suggest they “come forward” before the lawyers come & get them.
    ———————
    He is hoping they will come forward because there’s little chance of the lawyers being able to go & get them.

    The accuser said it was him before retracting. Provided the Twitterati didn’t repeat the accusation after it had been retracted, they should be in the clear.
    8-)

  46. AMBER

    We will see.

  47. Colin:

    Check out Tory World Map [I think from Not the Nine-o-clock-News – a book I expect] for brilliant non-PC humour.

    Really did have me larfing out loud.

  48. PAUL

    Have a vague notion I have seen it-but willl check.

    If I may may return a recommendation-“Ee By Gum Lord-The Gospels in Broad Yorkshire”, by Arnold Kellett..

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