Ballots and pay packets

Did the relationship between voting and the economy change after May 2010?

Between 2004 and 2010 when individuals were upbeat about the national economy and about their own personal finances, and in addition felt that Labour could manage the economy well, they were more likely to support the government. When they had the opposite perceptions, they were more likely to support an opposition party. That is the conclusion of the academics Paul Whiteley, Harold D Clarke, David Sanders and Marianne C Stewart in a recently published study of the relationship between the economy and electoral support.

The idea that improved economic perceptions politically favour the incumbent party also informs what Lewis Baston, writing for Progress, termed ‘the Todd thesis’. This is based upon two trends that I noticed during the last year: the narrowing of Labour’s poll lead and the growing proportion of the electorate that describes the economy as doing well. When the former is regressed on the latter, the model indicated that for every one per cent increase in the proportion of the electorate that think the economy is doing well, the Conservatives should close on Labour by 0.6 per cent.

The proportion of the electorate that think the economy is healthy has doubled in the nine months since I proposed ‘the Todd thesis’. The relevant YouGov series averaged 13 per cent during October of last year, while 26 per cent was the corresponding figure for July 2014. Given the relationship proposed and the polling positions at that time, it implied that the Conservatives would achieve a poll lead when a quarter of the electorate described the economy as doing well.

Yet July closed with Labour’s lead at four per cent. While 26 per cent is barely more than a quarter, it is striking that Labour retained a non-trivial lead for longer than my thesis indicated the relationship between economic perceptions and voting intentions would allow. As more people like what they see economically, however, the relationship I proposed may reassert itself. It may just be that the Conservatives need somewhat more than a quarter of the electorate to think the economy is performing well for them to seize a poll lead.

Whiteley et al put forward evidence that indicates that even this may not be enough for Conservative success. They have crunched the data to find that over the final six years of the last Labour government a change by a voter from being very pessimistic to being very optimistic about the national economy increased their probability of voting Labour by 0.26 per cent. In contrast, over the last four years such improvement in economic perceptions is not accompanied, according to the study, by any increased support for the current governing parties.

The authors conclude that the relationship between economic performance and voting intentions has changed since May 2010. They posit two explanations: first, the growing perception that no major party can solve Britain’s economic problems and, second, the fact that economic recovery is not reaching the wallets of the average voter.

While the importance of real incomes, which have been under pressure throughout this parliament, to voting intentions seems plausible, a weakness in Whiteley et al is that they compare two periods, one (2004 to 2010) which featured general elections in May 2005 and in May 2010 and another (2010 to 2014) that has not yet witnessed a general election. The proximity of a general election sharpens voters’ minds. This happened twice in the period during which they identify economic perceptions as a key determinant of voting behaviour, while we have not yet had a general election in the period during which they claim this determinant has weakened. As the general election nears, and voters focus more intently on the consequences of their vote, this determinant may recover its force.

The slow narrowing of Labour’s poll lead, which partly motivated my thesis, also points in this direction. Equally, however, as much as Labour’s lead has narrowed, this support has not transferred to the Conservatives, whose support level has long been stuck at around 30 per cent. The failure of Tory support to grow amid rising economic optimism may be explained by the factors highlighted by Whiteley et al: the perception that no party can improve things and the stagnant real incomes of the average voter.

The former seems consistent with the rise of the United Kingdom Independence party and the latter speaks to the centrality of the ‘squeezed middle’, the group whose fortunes Ed Miliband committed himself to assisting on becoming Labour leader. Surveys of employers indicate pay rises are in the pipeline. Pay will also be assisted by the above-inflation rise in the minimum wage in October. It remains likely that real pay will increase sooner or later. As far as the Conservatives are concerned, though, it needs to come sooner if they are to be electorally rewarded for it.

Labour’s lead seems large enough for it to remain plausible that the opposition party can buck past trends and win in the context of rising economic optimism. However, the sooner real pay rises, the more this possibility will be tested, as it will be by the heightened public scrutiny of the general election campaign. Given the improving performance of the economy, a Labour victory would validate the conclusions of Whiteley et al that the relationship between the economy and politics changed after May 2010.

Labour is no bystander in this, of course. Its economic plans must be robust enough to withstand the intense focus of the campaign and convince voters that there continue to be politicians capable of securing economic improvement, in particular in respect of the real pay of average workers. These tasks are suggested by the Whiteley et al analysis and are happily consistent with the core themes of Miliband’s leadership.

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Jonathan Todd is a contributing editor to Progress and chief economist at Demos

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Photo: Jamie

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Comments: 1...

  1. On September 11, 2014 at 4:03 pm Clyde responded with... #

    I am very mystified how how we could be gullaby over what the media and the Government is saying how good the economy is doing. When the reality is the economy in the North East is very patchy. I do think that most jobs in the North East is part time and government schemes which is no jobs at the end of it, its no good blaming the previous Labour Governments. The Tony Blair Labour Government kept all Margaret Thatcher conservative government policies, we are still paying the price of these policies today.

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