Tuesday, May 04, 2010

A Conservative Minority in the UK

With just two days of campaigning left in the British election, David Cameron has what is known as “momentum”. Polling at 35% against 28% for Labour and Liberals, the Conservative leader is increasingly looking like a winner. However, this lead is insufficient to give him an overall majority of the parties in the election. He needs 326 seats and at 35% he would secure less than 315.

More importantly, the polls are suggesting that almost half of those polled may yet change their minds at the ballot box, switching their vote at the last minute. It is a cliff hanger.

Gordon Brown is fighting back. In a powerful and emotional speech yesterday, he vowed to spend his life fighting inequality and injustice. Triggered by an emotional story from a teenager at a conference of social activists he found his passion and spoke from the heart. Nick Clegg, the Liberal leader, continues to have appeal as a person, but now that many have started to look at the Liberal policy platform, he seems stuck – they like him, but not what he plans to do.

Cameron has laid out what the Conservatives would do in the first six months in office. Repealing a large number of Labour’s more recent legislation, introducing a new budget with significant cuts to public service, starting to close down a number of quasi government agencies and cutting the pay of cabinet Ministers are all part of the package. Early on they will also begin their major reform of the education system, focusing on reducing bureaucracy, enabling cooperatives to run schools within the public school system (Charter schools run by parents, teachers and others) and changing the role of government. While some have criticized Cameron for making clear his plan – Clegg called it measuring the curtains for Downing Street – the clarity of the plan is attracting support.

It is unlikely that the result of the election will be known on Friday morning, as has been the case for the last several elections. In fact, it could take some time for the dust to settle and the outcome to come clear. If the vote is not decisive, then horse trading between the parties will begin. Gordon Brown will be asked by the Queen if he is able to form a Government and will likely try and fail, unless he also steps down as Prime Minister to enable a deal with the Liberals. If he does fail, then the Queen will call on David Cameron to see what he is able to do.

What is worrying some is the impact this uncertainty will have on the markets and on the value of the pound. Some traders suggest that the money markets have already discounted the impact of a hung parliament on sterling. Business leaders are not so sure. In New Zealand, which has had minority governments since it introduced proportional representation, this kind of uncertainty always slows investment and slows entrepreneurial development. Britain cannot afford a prolonged period of uncertainty, given its slow and fragile recovery from the recession.

By Friday mid-day the shape of the negotiations will become clear. The Queen will be advised to act quickly so that she is not seen as delaying the process of arbitrage which will preoccupy the political class and the news media for several days. It may take several days for the dust to settle and a new Government to emerge.

Whatever happens, it looks like the final days for Gordon Brown. The press are already reporting behind the scenes maneuvering for leadership amongst potential candidates. Brown himself vows to lead the party into the future, but then what else can he say. It will take a remarkable shift of public opinion over a forty eight hour period for Brown to be able to withstand the pressure for him to go after the likely defeat he is about to experience.

As an observer, this is the most interesting election since the election of 1974. Too close to call and full of raw energy, the politicians have at least managed to engage the people in the election itself. Whatever the outcome, this in itself is quite the achievement. Let’s hope they will not be underwhelmed by the outcome.

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