Out of the blue

Today’s announcement by Theresa May that she intends to call an election in the UK for 8 June was an Easter surprise that nobody anticipated. From a political perspective, there are many good reasons why the PM would wish to hold an election now. First, the timing is propitious: The economy has withstood the Brexit shock better than most people expected, and although consumers are now being squeezed by the sterling-induced rise in inflation, with the result that real wage growth is now at its slowest since 2014, it has not yet gone on long enough to be really noticeable. It thus makes sense for her to hold an election before the bad news starts to kick in. Although the election was not originally scheduled to take place before 2020, there is a risk that in three years’ time, the economic fallout from Brexit would start to make its presence felt, which could be politically damaging.

Second, although the PM has previously said that the current government would serve its full term until 2020 it is pretty obvious that the manifesto commitments made in 2015 are constraining her room for manoeuvre. As I have pointed out previously (here) the election promise not to “raise VAT, National Insurance contributions or Income Tax" was a howler, which backfired in March when Philip Hammond was forced to rescind his planned increase in National Insurance Contributions for the self-employed following a backbench revolt. Oddly, the same backbenchers did not show any discontent when the commitment to remain in the EU single market was reneged upon (“We say: yes to the Single Market”). It is thus clear that the government realises the manifesto commitments are no longer appropriate in a post-Brexit Britain (so look out for a rise in self-employed NICs in the November Budget).

Third, the Labour Party is down and out. Jeremy Corbyn’s approval ratings are subterranean with three big pollsters giving him a net rating of between -36 and -41 (here). The Conservatives are ahead by 20 points in the polls, but prior to last year’s EU referendum the lead was only 5 points. I would conclude that Corbyn’s failure to speak out in favour of the near half of voters who rejected Brexit, and his decision to go along with the Conservatives’ Brexit timetable, has cost his party dearly. The bottom line appears to be that the Conservatives will win by a landslide with pollsters pointing to a parliamentary majority in excess of 100 seats, compared to 17 today.

As for UKIP, who cares? They appear to be a busted flush with their sole MP having quit the party last month and the party foundering in the absence of the charismatic Nigel Farage. Indeed, a party which existed only to force the UK out of the EU no longer has a raison d’etre. However, they could still damage Labour efforts to win seats in the English north and midlands by siphoning votes away, which can only help the Conservatives. Meanwhile, the Lib Dems are not expected to improve on their poor 2015 showing and the Scottish Nationalists will retain their lockout north of the border.

All this leaves me rather uneasy. The Fixed-Term Parliaments Act 2011 was designed to force governments to serve their full five year term and prevent them from choosing the timing of an election to suit their own purposes. Only twice since 1951 has a government called an election so early in its parliamentary term (1966 and 1974), and on those occasions the majority was either unworkably small (1966, when it was down to 4 seats) or the government was in a minority (1974). We have to go back to 1923 for the last time a government with a workable majority called an election so early. Following the 1922 election which gave the Conservatives a comfortable majority, the prime minister wanted to secure a mandate for tariff reform, which his government supported. In the event its 74 seat majority was wiped out in 1923 allowing Labour to form its first ever government (with support from the Liberals). So beware the lessons of history.

As it happens, sterling ended higher today as (in the FT’s words) “investors bet the prime minister would use the vote to neutralise Tory Eurosceptics and deliver a soft Brexit.” I am not sure it will necessarily turn out like this. Janan Ganesh, also writing in today’s FT, pointed out that the prime minister is not so much bending with the wind to appease the right-wing backbench Conservative MPs as much as she is a conviction politician on a mission. If you buy that version of events, then if the PM is able to secure a much wider parliamentary majority (as is pretty likely), she will then have a mandate to do pretty much whatever she wishes. And as the blog at Another Angry Voice points out (albeit in fairly intemperate language, here and here)  Theresa May has a lot in common with the right-wing of her party. This concerns me because it suggests that far from facing down the Eurosceptics, there is a risk she will be happy to deliver the Brexit-at-any-cost policy which so many of them want.

One thing is for sure: We should never underestimate the prime minister and she certainly does not come across as the type to be pushed around by anyone – especially by those within her own party. As Ganesh pointed out, we should not be fooled by the fact that “on Easter Sunday, one of the least pious societies in the world heard an explicitly Christian message from its prime minister.” As the old joke goes, she may be the clergyman’s daughter, but you couldn’t put anything pastor.