UK Political Outlook for 2024

The Rt Honourable Mark Field
January 11, 2024
Company News

In the months ahead UK politics will be dominated by relentless speculation as to the date of the forthcoming General Election. The quaint - or even 'working' - assumption underpinning such feverish chatter is that a sitting Prime Minister has absolute control over this fateful decision.

Rishi Sunak faces a predicament familiar to any Prime Minister trailing in the opinion polls as we enter the fifth and final year of the current parliament. Go early (in May) or wait in the hope that your electoral prospects will have markedly improved by the autumn? For what it's worth, I believe the Conservatives’ best chance of mitigating the extent of their losses will come in the spring, but I am almost certain that Sunak will wait until October or even November in what may be forlorn hope that 'something will turn up'.  

Amidst all the political and economic turbulence of 2023 one thing has been uncannily consistent - the Opposition Labour Party's twenty percentage point opinion poll lead. Unless this changes few would blame Sunak for hanging on doggedly until the autumn. Yet even a sharp narrowing of Labour's poll lead in the early months of the New Year would probably tempt the PM to run it long in the hope that this favourable momentum might continue.

The one contrast is that last year began with Sunak's personal ratings comfortably outstripping the Conservative Party's. It ended with his polling numbers having plunged to levels that compare unfavourably even with his two immediate predecessors at the point they were ousted from the leadership. Whilst it would be unwise entirely to rule out yet another leadership challenge from disaffected and panicking Tory MPs, the general mood is less revolutionary, more one of fatalism. A flood of further retirements from parliamentary foot soldiers will likely be announced in the weeks and months ahead as the unpalatable prospect of Opposition or, worse still, personal defeat at the hands of the voters beckons.  

So, what does history teach us about election outcomes when governments cling on to the bitter end? The record is a little more mixed than one might assume. Events can sometimes work in favour of the incumbent administration with most politicians understandably reluctant to forgo a final year in office if the long shadow of defeat hangs over them. In the 1990s the then Conservative PM, John Major, twice waited until virtually the last possible moment to 'go to the country'. In 1992 he confounded most commentators and all opinion pollsters by winning a narrow victory. Paradoxically, delaying that election in the (as it turned out) erroneous expectation that the prolonged economic recession would have come to an end by polling day probably worked in his favour as it heightened voters' doubts about the Opposition's economic alternative. Five years later clinging on until the last moment during far more clement economic weather served only to magnify the governing party's divisions (over European policy naturally) and establish ever more firmly the credibility and reliability of Tony Blair's New Labour Party. The landslide defeat that followed was the Conservatives' worst result since the 1830s.  

At each of the six General Elections since that 1997 calamity the Conservative Party has increased its vote share (a feat unparalleled in UK politics in the era of universal suffrage). At the last election it won twenty-four seats that had been Labour strongholds since the Second World War or even earlier (the so-called Red Wall). For a time, it seemed that the 2019 General Election might join 1945 and 1979 as turning point contests; more likely political historians will see it as a flash in the pan after which normal service was quickly resumed. The coalition that Boris Johnson's carved out of Brexit voters in the former industrial heartlands of England and northern half of Wales and affluent market-towns of the Midlands and South has simply proved too broad an alliance to hold together.

The last time a sitting government went into opposition was in May 2010. Gordon Brown's Labour Party had little choice but to run down the clock to the latest possible day in the aftermath of the financial crisis. As the economy bounced back from a fearful recession-cum-depression during 2009, the Treasury was able to prime the pump by unprecedented borrowing and VAT cuts. As a result, the opinion poll gap narrowed sharply in the months before that election; although the government lost office, the margin of its defeat was conventional rather than the rout that had seemed on the cards only months before.  

The risk facing any third or fourth term administration is that the longer it waits to call an election, the more irresistible becomes the argument that it is 'time for a change'. Voters stand ready to punish severely any government that blatantly overstays its welcome, especially where there is little tangible evidence of progress. Clinging on for its own sake is never a good look.

So, election timing will also be dictated by the success or otherwise that a government has in framing the narrative about the contest that lies ahead. It seems to me that there are clear parallels today with what turned out to be the long campaign of 1996-97. Then the incumbent Tories seemed unable to make up their mind whether to attack Tony Blair on the basis that he constantly changed his policy positions for expediency - or alternatively as a Trojan Horse to hard-left radical politics. Almost three decades on they appear to face a near identical dilemma in handling Sir Keir Starmer and his prospective government.

Options are evidently being kept open... for a while at least. National Insurance reductions announced in November's Treasury statement will take effect with almost indecent haste from early January, rather than at the beginning of the next tax year in April. The relatively early timing of the forthcoming budget for the first week in March is a further signal that a May election has not been entirely ruled out at this stage. This would also align national and local elections, probably enhancing the Tories performance in the latter and ensuring that the party's already depleted activist base is out working for victory.

Which brings us to the government's biggest and most intractable political headache as election year commences. The fact is that in the eyes of many Conservative Party members both the leadership and the parliamentary party as a whole lack legitimacy. As they see it, twice in the past four or so years, the Tory MPs have unilaterally overturned the membership's verdict in its single most important prerogative, namely electing the party leader. First in removing Boris Johnson, who was supported by two-thirds of the membership and within months of being anointed Prime Minister proceeded to win a once-in-a generation near landslide majority at the 2019 election. After his Tory parliamentary colleagues had unceremoniously ousted him, the membership voted in Liz Truss. To their dismay her premiership was terminated within seven weeks by the same MPs who then collectively installed Rishi Sunak (whose leadership claims had been specifically rejected by the grassroots after an exhaustive set of hustings) without even consulting the membership at large.

The simmering anger of Tory Party members has manifested itself in several ways. First, over candidate selection. One relatively little reported development has been the clear trend in 'safe' seats (those likely to be won even in a very challenging election) for local councillors and party activists to be selected in preference to the national list of candidates and Westminster-based special advisers and insiders. The presumption is that in future such MPs will be more aligned to grassroots opinion and willing to do the local membership's bidding. More worrying still for the leadership is the renewed threat that arises from the Reform Party and a resurgent Nigel Farage.  Anecdotally I understand that vast numbers of Tory Party members, especially those living beyond London and the House Counties, have already made it clear that they will support Reform candidates whose simplistic policy prescriptions on immigration, tax cuts and the defence of the realm are at odds with the Conservative government's actions in a cash-strapped world restricted by obedience to international treaties.  

Small wonder Rishi Sunak - like John Major before him - has been reduced to pleading with his parliamentary foot-soldiers to 'Unite or die'. It may be a cliche, but the electorate tends not to vote for divided parties; meanwhile in order to counter the threat from the Reform Party, each MP and candidate becomes tempted to stand on their own personal manifesto on the assumption that this will help them save their own skin. Expect to see much more of the faintly ridiculous self-important postering by faction leaders on both wings of the party that we saw late last year over Rwanda and migration policy.

The Sunak/Hunt partnership deserves more credit than it has received for stabilising the economic situation. They continue to be plagued by perennially pessimistic official forecasting and I suspect the out-turn in 2024 will be better than currently predicted. Nevertheless, economic growth will in all likelihood remain anaemic; interest rates will almost certainly come down a little and inflation will be further squeezed. However, the cost-of-living crisis will still impact many - especially those homeowners whose fixed-term mortgages are up for renewal. Few can confidently predict that international conflict will not also continue to adversely affect energy and transportation costs.  

Labour's strongest card will evidently be to ask relentlessly: 'Are you better off now than you were five...or fourteen...years ago?' In short, the economic outlook may not be appreciably better in the autumn than it is now.

One other factor that may prove influential in election timing is the US Presidential contest. Sensibly perhaps the Founding Fathers established fixed term elections, but the fact that the US goes to the polls on 5 November may have some bearing on election strategy here.  Not since 1964 have UK and US elections taken place within the same month; personalities aside (and I am not convinced that both or even either of the two current front-runners for the main party nominations in America will necessarily end up fighting the election) the biggest warning from the other side of the Atlantic is that even robust economic recovery since the pandemic has done little to boost President Biden's polling numbers. Perhaps the lasting impact of Covid has been to irreparably jolt voters' confidence in incumbent governments across the democratic world.

In a year when the world's largest democracy (India) and its largest trans-national bloc (the European Parliament) also go to the polls there is one New Year political prediction that can already be made with absolute certainty - 2024 will not be dull!

Disclaimer: The views, thoughts and opinions expressed within this article are those of the authors and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.

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