UK Election 2010

Thoroughly recommended, from Howard Davies & David Green:

There are areas in the coalition agreement where mating a pure-bred Tory policy with a pedigree Liberal Democrat manifesto commitment has produced a mongrel, but in the area of financial regulation the opposite is the case… The formal statement says the government will “give the Bank of England control of macroprudential regulation and oversight of microprudential regulation”. We may presume from this that day-to-day institutional supervision will remain with the FSA. That makes sense. 

Chris Giles

I’m not sure the coalition agreement lives up to the billing. Compared with budget plans the government has inherited from its Labour predecessor, the agreement includes no specific new spending cuts, lots of public spending pledges, copious tax cuts and a commitment to faster deficit reduction. Unless there are huge spending cuts or tax increases planned but not yet announced, far from contracting, the deficit is about to deepen.

Mr Osborne will have to announce public spending cuts of £57bn a year by 2013-14 from a  non-protected budget of about £260bn – cuts of about 22 per cent. The next few months will see the government progressively coming clean about these figures, blaming its predecessor for the mess it has inherited, and softening the public up for the brutal cuts to come. 

George Osborne, the new Tory chancellor, has been forced to water down plans to hand over banking supervision to the Bank of England under a five-year coalition deal struck with the Liberal Democrats.

Tory officials admitted that the Financial Services Authority could survive the planned shake-up of banking regulation, a move that will delight many in the City who feared that Mr Osborne’s original plan would lead to serious upheaval. 

Gilts down, sterling down and UK equities down. These things have followed news of a hung parliament in the UK, but there is plenty more bearish news out there to spook the markets. For example: (1) Yesterday’s record 1000-point intraday drop in the Dow, due to a clerical error or some massive sales, depending whom you believe; (2) Fears of further sovereign debt crises in Europe, where equities have been falling for days; and (3) Japan’s decision to inject $21.6bn overnight liquidity — using a crisis-era tool last used (to this extent) in late 2008.

Apparently, there is a great turnout today – some pundits are saying it might be the highest since 1997. But which party benefits most from high turnout?

Here is one indirect – some would say tenuous – answer: (1) the gap between Conservative and “progressive”  (Lib+Lab) votes narrows when turnout is high (see table); (2) the occasional voter tends to be more progressive than conservative (a controversial claim based on the idea that conservative voters are more motivated to perform their civic duty); (3) the progressive parties will split votes. 

In the last election, one seat required 26,900 Labour votes, or 44,300 Tory votes, or 96,600 Lib Dem votes. That astonishing Lib Dem figure – almost four times as many voters for a yellow seat than a red – is in fact a vast improvement on their historical average.

How the UK electorate has voted over time. The clear winner over time has been the “Didn’t Vote” party….

*Update* N.B. Our commenter rightly alludes to the disenfranchised, who are not shown on this chart at all. “Didn’t vote” covers those registered, but not voting.

Fancy a bit of light relief after all that voting? Try to fix the UK deficit yourself with the FT’s interactive game, and see how bad the economy really is!

Chris Giles

Based on pretty much the same opinion polls, how can UKPolling report predict the Conservatives will be 52 seats short of an overall majority, while FiveThirtyEight predict the shortfall will be only 18?

My colleague Alex Barker on the Westminster Blog sums up the arguments very neatly here, and if you want to read the full threads of the political nerds at war, all the links are here on the FiveThirtyEight site. I will just point to the evidence for both sides and then add some observations about the 2010 exit poll, which should give a pretty good prediction of the result at 10pm tomorrow.

Although there are quite a few differences between the models the big difference is that traditional UK predictions on seats are based on a uniform national swing, while the new kids on the block suggest a proportionate loss model is best. Uniform swing assumes that the national percentage point change in votes for a particular party will be replicated in every constituency. Nate Silver at FiveThrityEight argues that it is better to assume Labour loses the same proportion of its vote in each constituency, with the result that the percentage point losses are greater where Labour scored well in 2005.

What evidence exists? 

Chris Giles

If anyone had hopes that the final leaders’ debate would provide answers to the huge issue of cutting the budget deficit, they would have been sorely disappointed. All three leaders ducked the issue.

Although they were asked to spell out the coming spending cuts, all stuck to a familiar script of evasion and bickering.

Nick Clegg highlighted tiny spending cuts in defence from and biometric passports which are nothing like the sort of scale of cuts he recognises are needed. He even damaged his part’s reputation for slightly greater candour on spending cuts by getting close to pledging to protect hospitals and schools from cuts in his opening statement.

Gordon Brown did not mention spending cuts at all  in his first answer and repeatedly insisted that the £6bn of spending cuts the Conservatives propose for 2010-11 would  threaten a double-dip recession, while the more than £12bn of tax increases in 2010-11 had no effect on the economy.

David Cameron gave the impression that the Conservatives had spelt out difficult choices ahead and then mentioned a pay freeze in the public sector, an area which saves about £3.5bn and to which all parties have signed up to something very similar. Of the rest of the £46bn or so spending cuts a Conservative chancellor would need to introduce for the next three years, we heard nothing.

According to the on-screen worm judging the popularity of each leader in real time,