Budget 2014

Tomorrow we have the 2014 budget. There have been a few pre-budget polls, but they don’t really show us much we didn’t already know: the public are increasingly optimistic about the state of the economy as a whole, but remain pessimistic about their own personal finances (though less pessimistic than a year ago). The Conservatives have a lead on the economy that has grown as the economy has started to recover, but Labour retain a lead on cost of living issues.

The graph below shows the impact of past budgets on voting intention polls. Up until 2009 they are the government’s lead in the two YouGov polls before and after each budget, after 2010 and the advent of daily polling they are the average government lead in the daily polls in the two weeks before and after the budget.

Unlike most political events, budgets do actually have some cut through to the general public and do have the potential to change voting intention. You can see at least three budgets in the last decade that appear to have had a genuine effect on voting intention. In 2008 and 2009 Alistair Darling had to deliver grim news about the state of the economy and Labour’s poll position suffered, in 2012 was the “omnishambles” budget, with the granny tax, pasty tax and the 45p tax rate. All three of those were negative effects, it’s far rarer for a budget to have a positive effect (the apparent positive impact in 2003 was more likely the effect of the Iraq invasion).

The media often talk about budgets being an opportunity for fancy giveaways, a vote winning opportunity. The past data suggests that’s rarely the case. More generally they seem to be bullets to be dodged. In theory I’m sure it’s possible for a government to win support from a good news budget with popular policies, but in practice the general theme seems to be that a successful budget is one the government gets through without damaging their support.

Over the next few days we’ll get lots of polling on the budget. As ever, treat it with some caution. One point to note is that budgets are often more or less than the sum of their parts: you can get budgets where the public support all the little changes and announcements made, but it still goes down badly overall (and vice-versa). The things to really watch are whether there is any change to people’s economic optimism, to how well they think the government are doing on the economy, to which party people trust more on the economy and living standards, things like that… and, of course, voting intention itself.


99 Responses to “Budget 2014”

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  1. Another cut in the top rate of tax should add a few points onto Labour’s lead.

  2. As predicted, Labour back on 38% tomorrow. Con 34%, LD 11% UKIP 11%.

  3. Since a question was asked last thread about Con and Lab scoring equally in a YG poll, I got thinking about what really are the chances….

    I took all of 2014 polling data for Con and Lab and took the mean and standard deviation. Given the sample size and data pattern, I assumed it was normally distributed.

    I then charted the chance of Con polling x and Lab y by multiplying x and y together and recording the figure as a percentage.

    I created a table of the resulting, deleting columns where the result was 0.0000 over 4 decimal places. This meant the VI that remained was Con from 29 % and Lab from 43 %.

    Here is the table:

    https://drive.google.com/file/d/0BzTTW1ecy-NDbEpibXVYbnE5QXc/edit?usp=sharing

    Basically if this years polling remains as is, on any given poll the chance of a Lab lead is 99.955%.

    The chance of a tie is 0.042 %.

    The chance of a Con lead is 0.003 %.

    The results surprises me, but I will post a link to the details for peer review.

    However, unless my data is badly wrong, no wonder the current polling is highly unlikely to produce anything other than a Labour lead.

    That could all change though….

  4. 38/34 – the odds are 7.66 %, fifth most likely…

  5. Good work Catmanjeff – but as you say it may all change.

  6. Please ignore the Macbethian context of the statement, but a member of the Coalition UK Government (Alastair Carmichael) told Scottish farmers –

    “There is no question of there being a referendum [on EU membership]. There is no mechanism for the Conservatives to deliver a referendum 2017. That is the hard political fact.”

    http://www.farmersguardian.com/home/latest-news/sparks-fly-at-nfus-scottish-independence-debate/63097.article

    Can anyone suggest what the basis was for his surprising statement?

  7. The UK running the largest deficit in Europe should preclude any tax cuts but Osbourne seems to be getting away with a very pliant press who hardly report it so maybe he will go for it.

    It would mean the UK’s deficit continuing to run over £100 billion a year. It’s at £110 billion this year, and 7.1% of GDP. Way above most other EU countries. The original target of clearing it by 2015 is long gone. The new target of 2019 is unlikely to be met, let alone with any substantial tax cuts.

    I think he will still do it. Missing his targets massively is not being picked up the Labour and the press and docile.

  8. Last line was a complete mess. Should have said ‘ Missing his targets massively is not really being picked up by Labour and Balls, and the press are docile.

  9. Ed
    Yes I noticed that our financial gurus on here never mention it. I don’t suppose there is much point of having your own currency unless you can permit yourself in this way. That was what the Cameron ‘veto’ was all about -the right to run up further debt.

    It’s the number one topic in the EZ financial press, (well, the press full stop).

  10. I might have missed discussion of this, but Lord A tweeted this earlier today – “Interesting Survation poll which is restricted to those with full or part time employment. CON 26% LAB 44% LDEM 7% UKIP 15%”

    Does anyone have any background on this?

  11. Alec
    yes you did, have a look back.

  12. @Alec

    Link here:

    survation.us1.list-manage.com/track/click?u=e17762efe2cccb1f0ed943c1f&id=1eacbeac9b&e=918b3a7f43

  13. More info:

    Fieldwork Dates
    7st – 12th February 2014
    Data Collection Method
    The survey was conducted via online panel. Invitations to complete surveys were sent out to members of
    the panel. Differential response rates from different demographic groups were taken into account.
    Population Sampled
    All adults in full or part time employment, aged 18+ England, Scotland and Wales.
    Sample Size
    1,000
    Data Weighting
    Data were weighted to the profile of all adults aged 18+ in full and part time employment. Data were
    weighted by gender, age, region and employment status. Targets for the weighted data were derived
    from Office of National Statistics data.
    Margin of Error
    Because only a sample of the full population was interviewed, all results are subject to margin of error,
    meaning that not all differences are statistically significant. For example, in a question where 50% (the
    worst case scenario as far as margin of error is concerned) gave a particular answer, with a sample of
    1,000 it is 95% certain that the ‘true’ value will fall within the range of 3.1% from the sample result. Sub-
    samples from the cross-breaks will be subject to higher margin of error, conclusions drawn from cross-
    breaks with very small sub-samples should be treated with caution.

  14. Thanks

  15. @Howard @ED

    All the more curious when deficit reduction was the stated no.1 reason for the Coalition. I’d like to know what the overall National Debt is now, compared with 2010. Inclusive of QE.

  16. @RAF oh, the debt has spiralled upwards. Doubled I think.

  17. For the life of me, I cannot understand why we need a new £1 coin or what it means.

  18. @ON

    Is the “Farmer’s Guardian” a reliable publication? I ask because to me it gets the Tory referendum position wrong – viz: “the potential 2017 referendum, which Prime Minister David Cameron has pledged to hold if he can’t negotiate better terms for the UK”. As far as I’m aware the referendum will be held in 2017 following negotiations and not dependant on the results.

    One suggestion I can make is that Mr Carmichael is just following standard LD practice of tailoring his message to suit his audience, and hoping nobody notices that the message is quite different elsewhere. Or he might be assuming the continuation of the coalition and a LD veto. Either way the vacuousness of the statement makes the suggestion that he might be next LD leader a bit unlikely.

  19. @Alec

    There’s plenty of discussion on the implications of the Survation poll from around 9am this morning to early afternoon on the previous thread, if you care to look.

  20. @Catmanjeff

    It ought to change – if it’s going to change – once the idea of an upcoming general election starts to take hold in voter’s minds. I’ve not heard a peep about it from anyone I know. At a guess, late summertime might be when it starts to seriously register. Then we’ll get some meat on policy bones, people will start thinking & talking about it more, dk’s will start to know.

    Then the likes of us will start to get excited about an upcoming election.

  21. postageincluded

    I’m not a regular reader, but I suspect that the Farmer’s Guardian is as reliable as the Grauniad. :-)

  22. @chatterclass

    “For the life of me, I cannot understand why we need a new £1 coin or what it means.”

    The clue is they are not showing the two coins side by side so could the new pound be smaller, much smaller.

  23. @chatterclass

    “For the life of me, I cannot understand why we need a new £1 coin or what it means.”

    Seems there are 45 million forgeries of the current coin floating around.

    Since there are far more QE created versions, I’m surprised that the Coalition are trying to freeze out the private sector version!

  24. Will it be the size and shape of the old thrupenny bit ?
    Maybe somebody at the Mint had the idea of re-using the old moulds, there used to be 80 of the little fellows to the pre-decimal Pound.
    Let’s go the whole hog and bring back the duo-decimal system !

  25. Has the UK Government estimated how much it would cost to rejig all the coin machines & shopping trolleys to take the new coin?

    Or are they assuming that inflation will have reduced the coin value of the old threepenny bit, and decided we’ll all use gold guineas to do our shopping?

    Shameful lack of clarity.

  26. Looking at the tables this morning, poll similar to last one for Con and Lab, except a shift of about 5-6% of 2010 Con voters going from Labour to Con.

    Within the usual ranges though.

  27. NickP

    “Another cut in the top rate of tax should add a few points onto Labour’s lead.”

    It should happen but it won’t.

  28. OLDNAT

    @”Has the UK Government estimated how much it would cost to rejig all the coin machines & shopping trolleys to take the new coin?”

    “Forgery of the existing £1 coin is a direct cost to banks and cash-handling centres and to slot machine operators; the plan to replace it will impose costs on operators of those machine but has been broadly welcomed”

    FT

  29. I have been waiting for this to be clarified.

    From day one of the seige by Russia of the Crimean Ukrainian barracks it was clear that they would become a potential flash point.

    http://www.smh.com.au/world/ukrainian-serviceman-killed-ukrainian-soldiers-given-ok-to-fire-in-selfdefence-20140319-hvk7z.html

    What is going to happen now to these unfortunate soldiers & sailors?

  30. European Parliament prediction from PollWatch 2014 –

    GUE-NGL: 59
    S&D (Labour): 215
    Greens (Green, Plaid, SNP): 37
    ALDE (Lib Dems): 66
    EPP: 211
    ECR (Conservatives): 40
    EFD (UKIP): 33
    Non-Inscrits (BNP): 90

  31. This childcare allowance looks interesting. It’s a big sum, and on the face of it a potential vote winner, although it doesn’t start until after the election, and Labour have some competing ideas already floated. It does seem like a major battleground though.

    I’ll declare my interest here – no kids, slightly aghast that we need to keep subsidising children in such an overcrowded world, but that’s a personal view.

    While I think anything that helps childcare costs is likely to prove popular, I can’t get away from the nagging feeling that this is like Brown’s expansion of tax credits – good politics getting in the way of solid economics.

    While there are sound reasons to propose all of these moves, both sets of policies create large client groups within the population, receiving substantial benefits at huge expense to the tax bill. Other groups not benefiting directly will pay the costs, and adjusting such schemes in the future gets extremely difficult due to the politics of numbers. For example, there really isn’t any need within the modern welfare state for Child Benefit – those in need could be managed via other targeted payments – but can anyone imagine a government scrapping CB?

    We’re told that complexity is the bane of the tax system, but this new scheme is yet another complexity.

    I can’t help feeling that we should be seeking to remove as many of these bolt on schemes as possible, reducing spending in the process, and reducing taxation with it. Then people can choose to have children or not, and take the consequences.

  32. ALEC

    I think itv was you who referred to cybernat activity recently.

    Did you see reports of the attack on Marr after his interview with Salmond ?

  33. Interesting set on employment figures from the ONS. On the face of it, some good figures, but they are actually reporting a fall in the number of employees, with self employment providing all the increase.

    This is really very surprising. Again, I’m going to return to those PMI surveys that @Colin is so bored with. All of these – construction, services and manufacturing – have consistently claimed that employment is up strongly, with confident employers taking on more staff, month on month.

    Yet here, in the actual ONS data, we find employee numbers have declined.

    What’s going on?

  34. Alec

    Very much agree with that, as you say its just creating large client groups at a huge expense to the tax bill. We should be simplifying taxation and reducing or eliminating benefits where ever possible.

  35. TOH

    @ “We should be simplifying taxation”

    I agree. GO is becoming a tinkerer like Gordon.

    What happened to all the reports from this :-

    https://www.gov.uk/government/organisations/office-of-tax-simplification

  36. @colin – not sure it was, but I did see the reports. There are problems in the treatment of opposing views in the debate, but thankfully restricted largely to cowardly online beasting, rather than what we see in Ukraine.

  37. Since all good news is pre-announced in a budget there is little surprise other than the nasty things that are obscured or require digging out for analysis. No wonder the occasion has lost it’s impact on the electoral cycle. Politicians really have lost the art of populism.

  38. Somebody asked about what was happening to the debt (and of course the deficit). Here’s a link:

    http://en.wikipedia.org/wiki/Stability_and_Growth_Pact

    and follow on from there (there is far more to read and digest). There are four countries that need to do something about it and actually are succeeding (Austria, Netherlands, Hungary and Germany) plus a lot which do not need to worry much (all in the green above Austria on the first chart). Of course it’s the ones in the EZ who really need to be prudent or better, since they share the common currency. Only the UK is on the naughty step, of those member states outside the EZ.

  39. @Alec, Colin, TOH

    Say what you like about IDS, but the simplification principle behind Universal Credit is actually laudable and has the potential to provide a much more coherent benefit regime at reduced administration cost. Arguments about the competence and spirit under which this exceedingly complex change is being developed are for another page.
    This childcare benefit/relief scheme, which doesn’t fit with any other benefit or tax relief and requires claimants to register separately from anything else, seems to run completely counter to the principle and to undermine what UC is trying to do. Of course the rather complicated rules on Child Benefit just add to the overall complexity (and, I imagine, admin cost)

  40. Guymonde

    Good points.

    I remember filling out all the forms for the pension credit for my aged relatives and reflecting that one needed a degree in ‘social payments technology’ to handle it all.

    In fact GB’s various credits were a noble attempt to deal with the iniquity of not being able to get reverse taxation (tax credits) but the admin was beyond many people’s intelligence and / or education. in my case one was also dealing with increasingly demented elderly, who nevertheless could still vote (!).

  41. “I remember filling out all the forms”

    Don’t you mean fill in all the forms?

  42. One idea would be to restore the universality of child benefit so that everybody gets it (regardless of tax rates) and increase it, but limit it to either two or three children. Increase it substantially but scrap all other child benefits including free school meals, childcare, nurseries etc.

    Universal benefits are cheaper. it all becomes self defeating when you try to means test and target.

  43. GUYMONDE

    Agreed.

    I think things changed fundamentally under GB’s tinkering.

    In introducing things like Working Tax Credit, he moved Welfare from Safety Net, to Minimum Income Guarantor.

    It has really changed the degree of complexity & targeting now inherant.

    I agree that UC is a fine idea with the right objective-smooth transition from welfare to wage without disincentives & marginal cliffs appearing.

    But I am afraid I don’t have any confidence that our civil service can deliver the IT system required.

  44. Bill Patrick
    No, we Bristolians fill OUT a from, where’s your education me babber?

  45. @ Alec re unemployment figures

    ‘The ONS is 95% confident that the figures are accurate to within plus or minus 81,000’ according to the BBC.

    Some wriggle room for PMI figures?

  46. NickP
    My personal worry about paying benefits in cash is that one has no control that they go to the persons intended. My wife used to fill the car tank with the CB. Alright, it was just to save going to the bank, living , as we have always done, in a remote rural area. We had a P.O.

  47. @COLIN

    Methinks blaming the civil servants is a touch disingenuous. The recent NAO report http://www.nao.org.uk/wp-content/uploads/2014/09/Executive-Summary.pdf very politely points the finger at unrealistic timetables set by the politicians.
    This in turn led to a wholly inappropriate development methodology being used to save time: this has now been replaced by a development methodology which seems to have been invented for this programme and sounds exceedingly dodgy. Plus (as is traditional in most large IT programmes, especially but by no means exclusively in government) they are making up the requirements as they go along and I bet someone is scratching his/her head this morning wondering how the childcare thing can one day be incorporated.

  48. howard

    True. But I thought customer “choice” was the driver behind neo-liberalism? Give everybody the money they need according to their circumstance and if they blow it on booze, the kids need a new carer. Frankly that will be true whatever the benefits system, or lack of.

  49. I don’t watch the budget anymore. Cannot stand the squeaky voice droning on for over an hour. Plus we all know that the budget details are not always announced. They are hidden in the various books and further announcements to be found out later.

    Will this budget have any affect on polling ? I very much doubt it.

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