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Anvar Sarygulov: Experiences and expectations of businesses during the COVID-19 pandemic

By Anvar Sarygulov, BB Research, Centre Write, Politics

The COVID-19 pandemic has generated a profound health and economic crisis in the UK.

More than nine million workers have been furloughed through the Coronavirus Job Retention Scheme (CJRS) for at least some time in the last three months, with the government paying 80% of their wages. Alongside this, there has been a raft of other grants, loans and funds available to businesses of all sizes to keep them afloat.

But economic recovery is likely to be a long and bumpy road. Businesses are likely to be negatively affected for some time by efforts to contain the pandemic and weak consumer demand.

Government currently plans to scale down CJRS over the coming months, and to end it fully by the end of October 2020. This will force businesses to make difficult decisions about their workforce.

We have partnered with Opinium to examine the experiences and expectations of businesses during the COVID-19 pandemic. In particular, we want to provide helpful insight into how businesses have operated and will operate after the pandemic.

Methodology

Polling was undertaken by Opinium and conducted between 18th and 24th June 2020. It consisted of a balanced sample of 520 business leaders in the UK across different sizes and sectors. To ensure robust sample sizes, quotas of at least 100 were applied to each business size; sole-traders, micro, small, medium, and large businesses.

Questions related to furlough were only asked of businesses which have furloughed at least some of their stuff through the Coronavirus Job Retention Scheme (CJRS). Out of our sample, 297 businesses have utilised the scheme.

In regards to business size, ‘micro’ refers to a business with one to nine employees, ‘small’ to those with 10 to 49 employees, ‘medium’ to those with 50 to 249 employees, and ‘large’ to those with more than 250 employees.

  1. Furlough

As seen in Chart 1 below, out of businesses which have utilised the furlough scheme, a majority (58%) have been topping up wages so that workers receive 100% of their current pay. In contrast, a significant minority (29%) have not been topping up wages at all. Importantly, of all business using the furlough scheme, 69% have topped up wages at least partly.

Medium (81%) and large businesses (79%) were far more likely to report topping up wages at least partly in comparison to small (59%) businesses. Although it should be noted that a majority of all types of businesses using the furlough scheme have topped up wages at least partly.

Similarly, London-based businesses were significantly more likely to be topping up wages (86%) at least partly than businesses outside of London (55%). But, again, across the country, most businesses using the furlough scheme have topped up wages at least partly.

Base: 297 UK business leaders. Results for sole trader and micro business sizes are not shown due to small subsample size.

From August, the Government expects businesses using the furlough scheme to start paying, gradually, a greater share of wages and pensions contributions for furloughed employees.

As seen in Chart 2 below, most businesses (71%) are confident or very confident that they will be able to pay an increased share of wages for furloughed employees.

However a notable minority of businesses are not or not at all confident (24%) that they will be able to meet an increasing part of the wages for furloughed employees, indicating that a sizeable number of businesses are likely to struggle with the gradual withdrawal of the CJRS.

Once again, medium (78%) and large (83%) businesses – and businesses operating in London (85%) – are more likely to express confidence that they can pay in increasing part the wages of furloughed employees in comparison to small businesses (59%) and those based outside of London (60%). Although, it should be highlighted that a majority of businesses of all sizes and across the UK are confident they will be able to pay an increasing share of the wages of furloughed employees.

Base: 297 UK business leaders. Results for sole trader and micro business sizes are not shown due to small subsample size.

Unemployment has been rising since Covid-19 came to the UK. But, with the withdrawal of the CJRS, there are fears of mass unemployment.

As seen in Chart 3 below, just under half of businesses (48%) expect to keep all furloughed staff on the payroll after CRJS ends. However, a considerable proportion (44%) of businesses do not expect to keep all of their current staff on payroll after the CJRS ends, with 31% of businesses expecting to lay off some furloughed staff, 9% expecting to lay off most of furloughed staff and 3% expecting to lay off all of furloughed staff.

There is significant contrast between medium and large businesses. Most large businesses (62%) are expecting to keep all of their furloughed staff on the payroll after the CJRS ends, while most medium businesses (65%) are expecting to lay off at least some people who are currently furloughed. The picture is more mixed for small businesses, with 47% expecting to lay off at least some furloughed staff, and 41% expecting to keep all of them.

Businesses in London are more likely to expect at least some lay offs of those who are currently furloughed (51%) than businesses outside of London (38%).

Base: 297 UK business leaders. Results for sole trader and micro business sizes are not shown due to small subsample size.

2. Operating during a pandemic

As seen in Chart 4 below, 31% of businesses have already opened up, or have stayed opened up, to staff to work from. Meanwhile, most businesses are planning to open their workplaces to staff to work from as soon as the rules allow (26%) or over the next six months (24%). Only a small number of businesses currently expect not to open to staff until 2021 (10%) or until a vaccine is found (3%).

While a majority of sole traders (65%) and a significant number of micro businesses (43%) are already open, the numbers are notably lower for small (24%), medium (17%) and large (7%) businesses.

Notably, businesses in London are far less likely to already be open (11%) compared to businesses elsewhere in the UK (40%). London businesses and are far more likely to expect to stay closed until 2021 (24% in comparison to 4% of non-London businesses).

Base: 520 UK business leaders

The Government has continued to relax social distancing rules as COVID-19 caseload has fallen. From July 4th 2020, most businesses will be able to reopen, provided they follow government guidelines on how to protect their employees and customers. Furthermore, the Government has relaxed the two metre rule to one metre where two metre distance is not viable, as long as other risk mitigation is implemented.

As seen in Chart 5 below, the vast majority of businesses (85%) report that they could operate to some extent under continued social distancing rules where staff and customers are at least two metres apart.  But only 23% of businesses could operate as normal. In contrast, 13% would not be able to operate at all. This suggests that the recent change in policy from two metres to one metre could be of significant help to a large number of businesses.

Sole traders (54%) and micro businesses (38%) are far more likely to be able to operate as normal even under stringent social distancing rules in comparison to small, medium and large businesses (12%, 8% and 4% respectively), with the majority requiring many or some adjustments while operating under a reduced capacity.

Businesses outside London are more likely to be able to operate as normal (29%) compared to those in London (12%). In contrast, a majority of businesses in London could either not operate at all (17%) or only in a very reduced capacity (35%) under stringent social distancing, whereas outside London this falls to 11% and 18% respectively.

Base: 520 UK business leaders.

3. Operating during a pandemic

Will businesses ever return to normal? We tested initial attitudes of business leaders.

As seen in Chart 6 below, when asked about whether demand is unlikely to return to normal levels after the pandemic ends, 34% agreed, 38% disagreed, 23% neither agreed or disagreed, and 5% said they didn’t know. This indicates there is a lot of uncertainty about demand for business in the long-term, even after the pandemic.

There are some minor variations on expectations of demand among businesses of different size. More notably, business leaders outside of London are more likely to have expectations that demand is unlikely to return to normal levels after the pandemic ends (38%) in comparison to London businesses (26%).

Base: 520 UK business leaders.

As seen in Chart 7 below, a significant number of business leaders (40%) agree that their business model will have to permanently change after the pandemic ends, while 32% disagreed. This means businesses are more likely to report than not that their business model will have to change permanently.

However, the majority of sole traders (61%) disagreed that their business model will change, while a majority of large businesses agreed (66%). Views among businesses of other sizes were more mixed, with micro and small businesses being more likely to disagree (35% and 29% respectively) compared to medium businesses (14%), as the latter was more likely to not hold an opinion in either direction.

While similar number of business leaders in London and outside of it agreed that business models will have to change (43% and 38% respectively), levels of disagreement were notably lower in London (23%) compared to outside of it (36%).

Base: 520 UK business leaders.

Conclusion

The Government’s furlough scheme is generous relative to support offered in other countries. Most businesses using it are managing to top-up the wages of their furloughed staff and expect to do so in the future as the conditions around using CJRS change.

But a significant number of businesses lacks confidence in paying more wages for their furloughed staff and expect to let go at least some furloughed employees. A significant increase in unemployment is highly likely.

The social distancing measures have helped to stop the pandemic from running out of control, and businesses will benefit from the recent relaxations in the two-metre rule. But the threat of a resurgence continues to trouble businesses, with business leaders more likely to believe that demand for their trade will not return to normal for some time and that their business model is likely to be permanently changed.

The Government has already implemented extraordinary measures to address the COVID-19 pandemic. In the months ahead, they will have to effectively follow-up on current policies, to both contain the economic fallout from the crisis and to build the road to the recovery.

Anvar Sarygulov is a senior researcher at Bright Blue

 

Notes:

The full data tables for the polling can be found here.

We are grateful to Opinium for advising on and carrying out the survey.

Alex Griffiths: The Scottish Parliament needs more dissent

By Alexander Griffiths, Centre Write, Politics

Since its establishment in 1999, the Scottish Parliament has seen a dramatic growth in its powers, moving from being a clearly subordinate chamber to one with significant autonomy over, not just education and healthcare, but soon welfare powers as well. Moreover, there are calls for the transfer of even wider powers still.

Problems with the operation of the parliament have been recognised for some time. Too often a conformity of opinion along party lines has undermined proper scrutiny. Former Member of the Scottish Parliament (MSP) Cameron Buchanan has stated that when the Scottish National Party (SNP) had a parliamentary majority, “’most of us felt we were becoming a one-party state’”. 

In 2016 a Parliamentary Commission on Reforms was established to consider what areas required change, and then submitted 70 recommendations for change, some of which were then acted upon. The recommendations, however, do not go far enough to change the incentives of politicians away from conformity, and that a more radical step is needed to encourage greater dissent. 

The Additional Member System (AMS) entails voters crossing two boxes, one for a candidate to be their constituency representative and the other for a political party at a regional level, called the regional list vote. In this regional list vote, if enough people support a party, then that party qualifies for one or more list MSPs, who are chosen from a ranked list submitted by a party. 

When the AMS was first introduced it was seen as a positive innovation which would improve debate by allowing a greater spectrum of parties to be heard. That hope has not panned out, however, because of the way the system shapes incentives for individual politicians. 

At present, whilst you do need obviously for a certain number of voters to support your party, what you more importantly need is for your party to place you at the top of the list because, in the case of most parties in Holyrood, this guarantees you a seat in parliament. 

This understanding of the incentives has already been recognised. Lord McConnell, the former First Minister of Scotland, highlighted that with the AMS, “the balance between MSPs representing their constituents and their parties slip too far in favour of the latter” and that a culture of “jobs for life” for list members has developed. What then is needed is a shock to the system, an element of randomness that would shift the incentives of list members.  

In practice, this would entail that when parties submit a list of candidates for a region it is unranked and instead after the votes are counted and the regional list seats divided among parties, a computer or a process (drawing lots, names out of a hat etc) randomises which candidates from each party are successful. 

This may seem like a spurious suggestion, but it should be treated seriously as an attempt to mitigate conformity. Obviously, a party would still be able to provide a list of politicians who have been previously loyal but the element of randomness in the election of those who are successful would allow for some measure of dissent and diversity to sneak through. It would mean that for a successful list candidate, your success in being elected would rest less on party patronage, and conforming to the party’s will would not guarantee re-election. 

This then would change the incentives of politicians’ away from keeping their heads down, to trying to make an impact now as there’s no guarantee you’ll be back for another term. Finally, and perhaps crucially, voters would gain in this scenario because their list vote would be of greater importance and because they would benefit from the greater scrutiny attached to legislation.

This proposal is not however a silver bullet. It is not designed to improve legislation or even necessarily improve the quality of parliamentarians. What it does do though is slightly change the incentive structures at play in Scottish politics and potentially allow for more honesty of opinion and the challenging of questionable arguments or evidence. Too often now it is easier to agree than dissent because it requires less effort and you will be personally rewarded for it. 

That incentive structure is not healthy for politics and that needs to change. If it doesn’t, then then over the coming years the Scottish Parliament will have more powers but worse politics.     

Alex is a researcher at Bright Blue. [Image: Colin]

Ollie Tinker: What should ‘one-nation conservatism’ mean in the 2020s?

By Centre Write, Politics

One-nation conservatism has always been a relatively malleable concept. First conceptualised in 1837 by Benjamin Disraeli, it has constantly been reinvented throughout the party’s history to meet the demands of an evolving society. Historically, it has referred to the paternalistic duty of the privileged to look out for those less fortunate and a commitment to maintaining the Union of the United Kingdom, but following the result of the 2019 General Election, it should be reinvented once more to meet the demands of British society in the 2020s. With the advent of Boris Johnson’s ‘People’s Government’ amidst the increasing fragmentation of the Union, Britain needs one-nation conservatism more now than at any time since the immediate aftermath of the Second World War.

Perhaps the most notable period of one-nation conservatism was between 1951 and 1964, when Winston Churchill, Anthony Eden, Harold Macmillan, and Alec Douglas-Home led pragmatic governments committed to narrowing inequality whilst helping Britain recover from the economic tribulations of the War. They were also faced with the challenge of establishing Britain’s place within a changing international order. Boris Johnson’s government also faces this challenge, as the task of re-establishing Britain’s global role in the wake of Brexit presents huge opportunities within economic and foreign policy. Similarly, the flattening economic and social consequences of the Coronavirus outbreak require policies which cater for everyone in society. Naturally, this requires different policies to those implemented after the War, but the principle remains the same – the Government must represent the interests of everyone in society, making no exclusions based on race, class, gender, sexuality or disability.

Such has been the transformation of British society, the Conservatives now represent constituencies outside their traditional support base, such as Blyth Valley and Bassetlaw. Transformations require new commitments. Where one-nation conservatism has traditionally aimed to narrow the degree of inequality between the richest and poorest sections of society, it should now strive to narrow regional inequality as well. One of the worst countries in the world for regional inequality, Britain has seen a disproportionate yet necessarily high level of investment in infrastructure and employment in London and the South East, but often overlooked working class and coastal communities in the north of England, Wales and Scotland. In 2017, average disposable income in London stood at £28,000 p/a, compared to just £16,000 in the North East. To be a one-nation conservative in the 2020s should mean a commitment to investing in infrastructure projects in underfunded regions of the UK, improving standards of education in these areas and empowering local communities.

Infrastructure projects such as HS2 are therefore essential to combat Britain’s increasing centralisation by making the north better connected. So too is the extension of subsidies to attract new employers to former manufacturing communities suffering from a high level of structural unemployment, to have a similar impact that Nissan has had in Sunderland. This is especially important in the context of an increasingly fragmented Union. The rise of Scottish nationalism, complemented by a lack of identification and engagement with London and the South-East from other parts of the country has shrouded the future of the Union in uncertainty. This could be rectified by a commitment to promoting regional equality, by creating new opportunities for less developed areas of the country, without damaging progress already made in other areas. By adopting new principles, one-nation Conservatism can remain committed to its traditional principles.

In order to understand what one-nation conservatism means, it is important to understand what it means to be British. Whilst historically concerned with addressing class differences, the latest evolution of one-nation conservatism should strive to promote inclusivity and celebrate diversity. Post-war immigration from the Commonwealth, and more recently from Eastern Europe and the Middle East has seen Britain become a multicultural society where multiple faiths are practised. In 2018, 13.8% of the British public came from a minority ethnic background – a percentage which is much larger in urban areas. One-nation conservatives should promote inclusivity and tolerance, whilst aiming to narrow inequality between different ethnic groups. At a time where there is little that unites the British population, being British should be celebrated for the diversity it implies. Beyond ethnic diversity, one-nation conservatives should also promote inclusivity and equality of opportunity in terms of sexual orientation, disability, and gender.

Traditionally a pragmatic form of Conservative ideology, one-nation conservatism in the 2020s should be no different in this regard. It should be pragmatic in its attitude to the changing demands of society, and pragmatic in the means it adopts to achieve its socially liberal aims. This is not to say that one-nation conservatism should abandon Conservative economic principles. It should remain fiscally responsible, promote equality of opportunity, and reward individualism and enterprise. It should find a balance between social and economic liberalism to forge a Conservative Party which works for the whole country.

As a new decade begins, so too should the new direction of one-nation conservatism. The Conservative Party, by embracing the latest evolution of one-nation conservatism, has the opportunity to reinvent itself, unite the nation and protect the future of the Union – an opportunity it can ill afford to waste, given the need to adapt, to avoid losing power after ten years in government. The extraordinary election result , coinciding with the UK’s withdrawal from the European Union presents a unique opportunity for Britain to forge its own path once more. By empowering the new communities that it represents, and celebrating the uniqueness of multicultural Britain, the Party can dispel the urban myth that it represents only the wealthiest in society, and establish a new reputation as a benevolent party committed to equality of opportunity by economically responsible means. Beyond enhancing itself, the party can also make the United Kingdom a more liberal, socially mobile country with one of the most advanced infrastructure networks in the world. Only by championing the latest form of one-nation conservatism will this be possible.

Ollie is a second year History student at Newcastle University and is the winner of the Tamworth Prize 2020. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Number 10]

Toby Williams: Conservatives must heed the call for ‘society’

By Centre Write, Politics

The Conservative Party’s ability to adapt pragmatically to the political, economic and social landscape is often lauded by its supporters as the key reason behind its electoral successes, and derided by its opponents, who claim that the party is interested in nothing other than obtaining office.

While Conservatives certainly approach grand plans, dogma and ideology with a great deal of scepticism, the idea that this inevitably comes twinned with a lack of principle is entirely wrong. The party can, and indeed consistently has, fused its natural pragmatism with a clear and coherent political philosophy.

Philosophically speaking, what unites conservative thinkers from Edmund Burke to Sir Roger Scruton and politicians from Benjamin Disraeli to Boris Johnson is what has been labelled ‘civic conservatism’. Civic conservatism is often perceived to be a modern and obscure offshoot of the mainstream conservative tradition, but it in fact encapsulates the very heart and soul of conservative politics and is more relevant than ever.

In the past 15 years alone, there have been a number of excellent conservative thinkers who have highlighted the importance of civic conservatism. The David Cameron opposition years were heavily influenced by the likes of Danny Kruger, now the MP for Devizes, and Philip Blond, the author of the seminal book Red Tory, who both provided the intellectual basis for the future Prime Minister’s excellent Big Society concept.

Some years later, the seismic EU referendum ushered in a renaissance of civic conservatism, with David Goodhart’s Road to Somewhere and latterly David Skelton’s Little Platoons both arguing that neither deregulating the market or strengthening the state would constitute a sufficient response to the underlying causes of Brexit.

Naturally these writers make different arguments, but they are united by a belief that the excesses of ideology and dogma on both the left and right not only ignores but also endangers the key tenets of civil society such as a sense of place, community, tradition, the family, and local relationships.

The conservative, and indeed Conservative, priority should always be to strengthen these societal links which bind people together. Conservatism is, after all, based on a Hayekian perception of knowledge; the belief that information and wisdom isn’t concentrated in one place such as the central state or based on first principles but instead spread across society and time. 

This means that the institutions which make up society are incredibly important as they contain the experience and knowledge not just of a range of existing individuals but different generations too. True liberty is transmitted from civil society to the individual when that individual is firmly enmeshed in these traditional structures, rather than treated in an atomistic way.

Strong local links and a sense of belonging are becoming more and more important to people in this country and across the world. Four years ago, 17.4 million people voted to leave the EU overwhelmingly for eurosceptic reasons, but there were undeniably other related factors at play too. As Danny Kruger said in his excellent maiden speech:

Brexit is about more than Global Britain; it is a response to the call of home. It reflects people’s attachment to the places that are theirs. Patriotism is rooted in places. Our love of our country begins with love of our neighbourhoods. Our first loyalties are to the people we live among, and we have a preference to be governed by people we know. That impulse is not wrong; it is right.

Danny is absolutely correct. Brexit, and what has followed since, has demonstrated that our country is crying out for stronger community bonds, enhanced institutions and more of an emphasis on the local. If 1945 was a call for the state and 1979 was a call for the market, then the 2016 referendum and 2019 General Election were both a call for society.

The response to this call needs to focus relentlessly on the local, in the best traditions of conservatism. One way to advance this would be to build on David Cameron’s localisation agenda by making it easier for communities to own pubs, shops or post offices which are threatened with closure.

It should also involve strengthening the most fundamental element of civil society: the family. Fantastic Conservative MPs like Fiona Bruce have written extensively about how politicians could help to bolster families, while 44 Conservative MPs recently wrote to the Prime Minister to call for a new families ministry.

On the economy, the infrastructure revolution, free ports and reforming business rates will not only play a crucial role in boosting economic growth in areas which badly need it, but also help to improve the social fabric of these communities. The Prime Minister has rightly recognised that the state can play a crucial role in spreading the benefits of free market capitalism more widely, and in doing so strengthen societal bonds and a sense of place.

With some degree of irony, the radicalism of the decision taken on 23 June 2016 needs to be met with a genuinely conservative response. It is the Conservative Party, following its most fundamental instincts, which is uniquely placed to bring about the social renewal which the country clearly needs. With a Prime Minister who possesses an understanding of this along with the numbers he needs to be bold, the party can and must deliver.

Toby is a member of Bright Blue and was a Conservative Party candidate for the Mitcham and Morden constituency in the 2019 general election. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Number 10]

Nikolas Koch: Does Austria’s ÖVP-Green coalition set an example for Europe?

By Centre Write, Politics

In January, Austria’s first centre-right and Green coalition between Sebastian Kurz’s centre-right ÖVP and the Green Party was sworn in. Following the FPÖ’s ‘Ibiza-gate’ scandal concerning political corruption, Austrian chancellor Sebastian Kurz ended the previous ÖVP-FPÖ coalition with the words ‘enough is enough’. The snap elections in September increased the ÖVP’s vote share to 37%, as well as returning the Greens to parliament with 14% of the national vote. Abandoning traditional coalition-patterns with the FPÖ or the Social Democrat SPÖ, Kurz has instead decided for a novel solution by choosing to work with Werner Kogler’s Greens. Has the time for political ‘contraptions’ come by working with the predicted decline of traditional parties, and what does Austria’s example show us about the political importance of the global green agenda?

According to Austrian polls, 57% of Austrians support the ÖVP-Green government, who seek a ‘sensible mixture’ of welfare capitalism, globalisation and environmental policies. The Austrian example is not perfect, being more a division of power than an attempt to share it. Furthermore, a three-hundred-page coalition agreement sets out clear boundaries in the parties’ remits, and the Green Party enters government as the junior coalition partner which has accepted several traditionalist demands, from banning headscarves for schoolgirls to strict migration policies. However, the Austrian example shows how change may come from within the government and the novel interplay if conservative and green ideas. 

For other European countries, looking to Austria’s example presents an interesting example of what may be their political future. In Germany, the Greens are now polling as the second-largest party after the CDU/CSU, and coalitions between the two parties are already a reality in several state governments. It is certainly possible that this could be replicated at the federal level after the next election. However, how can we learn more broadly from the new green-conservative ideological coalitions?

Most importantly, the Austrian coalition shows how environmental policies do not have to be associated with any ideology but should be common ground for all parties who value protecting their world around them. There are no more ideological obstacles preventing conservatives from endorsing policies combating climate change than other political parties. In the UK, 64% of respondents want the Conservative Government to place a high or very high priority on the issue of climate change. Undoubtedly, the Government is making environmental policy an issue of greater importance, particularly with the upcoming COP26 summit. Nevertheless, there is a difference between superficial policy amendments and the fundamental shift of mindsets. Successfully responding to the climate crisis will require responses on a political, personal and business level. The environment cannot become the campaigning platform of only one part of society, but something we all think about and act on.

In the UK, the relationship between conservative and environmental politics has certainly been varied. Margret Thatcher’s period of ‘Green Thatcherism’ brought environmental issues to the fore, as she gave speeches at the Royal Society and the UN on the threat of climate change before linking it with wild conspiracy theories of ‘supra-national socialism’ in her later life. David Cameron proclaimed in 2010 that he would lead the ‘greenest government ever’ but his overall record presents a mixed picture and the May government, while enshrining a net-zero emissions target in law, had little time or political capital to expend on environmental issues. 

However, green and centre-ground politics can share a political basis supporting values of ecology, democracy and freedom. Capitalism can combat climate change. Already in the 1980s, former Austrian ÖVP leader Josef Riegler termed the expression of ‘eco-social market economy’ to incorporate sustainability and environmental protection into a regulated market economy. In this model of society, the terms market, social, and ecological should ‘chime with each other as equally essential elements in a melodious triad’. These ideas have never significantly been considered beyond academia, but the growing interest in stakeholder capitalism and social-benefit corporations certainly shows a shift as many seek a more sustainable existence.

Certainly, the UK will not be emulating the new Austrian coalition any time soon due to their differing political systems. However, we should look to Europe to see how the climate crisis can affect politics, and how novel ideas can present a new, positive plan to protect the environment. Environmental issues are not a fringe issue but at the heart of modern politics, and should be vital to the centre-right’s manifesto for change.

Nikolas is currently undertaking work experience at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Raul Mee]

Andrew Gibbons: Towards Better Policy Formulation

By Centre Write, Economy & Finance, Politics

To succeed in the marketplace for ideas, grounding policies in economic analysis is more important than making them distinctively partisan.

Good policies should be effective and durable.  While some may argue that Conservative policies should be distinctive, former Labour adviser John McTernan says that recent Conservative policies have been essentially bipartisan.  He asserts that present day Conservatives have not had “ideologically transformative ideas for public policy” in the way that Margaret Thatcher’s government did in the 1980s.  While not denying that some later Tory-initiated policies have been a lasting success, he claims these have all been bipartisan.

There is of course nothing wrong with policies having cross-party support.  Indeed, this may be desirable as such policies are more likely to endure in the long-term, a key example being auto-enrolment in pensions.

Bipartisan policies were familiar territory to New Labour.  Tony Blair writes in his book A Journey that “the credibility of the whole New Labour project rested on accepting that much of what [Margaret Thatcher] wanted to do in the 1980s was inevitable, a consequence not of ideology but of social and economic change…  Britain needed the industrial and economic reforms of the Thatcher period.”

McTernan sees the characteristic Thatcher policies as being “the trifecta of right to buy, privatisation and ending union power”.  These, he says, were fundamental in impact and irreversible.  We might also note Thatcher’s emphasis on entrepreneurship, deregulation and monetary discipline.

These policies were mostly based on economic analyses provided by an ecosystem of market oriented scholars and think-tanks, notably the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute.  Since those times, policymaking by Conservative governments has appeared less single-minded, if not intellectually rudderless or downright opportunistic.

What is lacking in much current Conservative policy debate is a core of economic analysis on which policies can be built.  Typically in the past there was an expectation that if markets were able to function properly, this would deliver efficient and desirable outcomes in many areas.  Where markets didn’t work, the job of government was to identify and rectify or bypass market failures, whether these were based on lack of competition or the existence of externalities.

Stian Westlake dates this phenomenon more recently, to the change of leadership in 2016.  In The Strange Death of Tory Economic Thinking he argues that since Theresa May became prime minister, the Conservatives seem to have stopped talking and thinking about economics.  As a result, “policy areas that would traditionally have been seen through an economic prism are discussed from a social or national perspective instead.”  He sees “a government that shies away from economic thinking, that tends to see issues that others might see as economic through other lenses, and that has made little attempt to tell an economic story about the UK.”

Clearly, focussing on long term productivity growth should be central.  Only by fostering income growth can we expect to deliver benefits across the nation.  Without growth and prosperity, redistribution will not work electorally, since robbing Peter to pay Paul is not just zero sum; it involves, in economists’ parlance, deadweight losses that potentially make everyone worse off.

Bowman and Westlake suggest in Reviving Economic Thinking on the Right that the principles – markets and free enterprise, strong institutions and a government that creates such conditions – are the easy bit.  But going beyond principles, we need answers to the challenges our communities face.  This means producing solutions which recognise self-interest while respecting the needs of those less able to support themselves.  The challenges include reinstating economic growth to boost incomes and employment, especially outside London and the South East, properly funding public services, ensuring decent housing for all, fighting widening inequality and discrimination, tackling climate change, and more.

Policy approaches founded on economic analysis will aim to rectify market failures wherever possible (whether addressing skill shortages or CO2 releases), to work with the grain of markets to avoid costly distortions (e.g. minimising impacts on behaviour unless that is a target variable), and to make redistributional measures incentive compatible (i.e. encouraging people to follow the rules).

While the challenges facing government are generally understood, original but workable policy solutions are valuable currency.  We now have a new government with a yet to be articulated version of one-nation Conservatism and little ideological baggage beyond taking the UK out of the European Union.  There is plenty of scope for ambitious think tanks to seed the agenda.

A flourishing economy will always facilitate many of the things governments want to do and so is a high priority.  Beyond that, deploying economic analysis to support proposals in any field will enhance their credibility, their effectiveness and probably their durability.  We need to dig deep and trawl widely to find analytically sound policy packages to offer the new government.

Andrew Gibbons is a former UK government economist.  Views expressed in this article are those of the author, not necessarily those of Bright Blue.

Anvar Sarygulov: Immediate public expectations of and priorities for the Conservative Government

By Anvar Sarygulov, BB Research, Centre Write, Politics

The Conservatives have secured a large majority in the 2019 General Election. A significant component to their success has been winning over voters which have not traditionally voted Conservatives, particularly amongst members of the working class in northern parts of England and Wales

While Brexit played a significant role in this, it is also important to acknowledge other policy shifts which have contributed. Boris Johnson’s Government has promised to break with the austerity that defined the 2010s, pledging more public spending, particularly for key public services such as the NHS and schools. Furthermore, with commitments to raise the minimum wage and infrastructure spending, Boris Johnson’s Government appears to be more economically interventionist than previous Conservative administrations. 

As the 2020s begin, it is worth reflecting on public expectations of and priorities for the new Conservative Government. Many promises have been made by the Conservatives during the election, especially for its new group of supporters on modest incomes. To what degree does the public expect these promises to be delivered? Are there policies which the public thinks would be of particular help to people on low and middle incomes, and to those living in areas described as ‘left behind’? And are there policy areas to which the public wants the Conservative Government to give greater priority to?

To answer these questions, we have conducted public polling, in partnership with Opinium, to examine public expectations of and priorities for the new Conservative Government.

Methodology

Polling was undertaken by Opinium and conducted between 20th and 30th December 2019, immediately after the General Election. It consisted of one nationally representative sample of 2,003 UK adults. From this overall sample we also have subsets of those who have voted Conservative (711), Labour (561) and Liberal Democrat (205) in the 2019 General Election. The sample was weighted by Opinium to reflect a nationally representative audience.

For nearly all questions, respondents could answer ‘Don’t know’. These responses are not shown in the below graphs for stylistic reasons. However, a link to the full data tables can be found at the bottom of this piece.

  1. Public expectations of the Conservative Government

In 2019, the Conservatives won record levels of support amongst those who are on low incomes. Despite this, the UK public is most likely to believe that the richest in society will do best under the new Conservative Government, with almost half (44%) indicating this, as Chart 1 indicates. In contrast, only 13% of the UK public believe that the working class will do best, and only 2% believe the poorest will do best.

However, as Chart 1 indicates, expectations of who will do best are heavily informed by political views. Conservative voters have notably different perceptions, believing first the middle class will do best (31%) and second the working class will do best (23%), while in contrast, more than three-quarters (76%) of Labour voters think the richest will do best.

As can be seen in Chart 2, the UK public is fairly pessimistic about the next five years. A majority of the UK public expects levels of undesirable trends – poverty (72%), crime (71%), inequality (71%) and national debt (72%) – to increase or stay the same. 

There is slightly less pessimism around the British economy: a slight majority expect the number of businesses (51%) and jobs (57%) to increase or stay the same, and a significant 70% expect wages to increase or stay the same over the next five years.

Furthermore, a minority (34%) of the UK public expect immigration to decrease under the new Conservative Government, despite this being a pledge in the recent Conservative Party manifesto.

There is a range of expectations in relation to high-profile policy promises that the Conservatives made during the 2019 general election campaign. As can be seen in Chart 3 below, a majority of the UK public expect the Conservatives to raise the National Insurance threshold to £12,500 (57%), to increase the national minimum wage to £10.50 (52%) and to reduce the number of low-skilled immigrants coming to Britain (54%). 

However, there is more scepticism on other high-profile commitments made by the Conservative Party. A majority of the UK public do not expect the Conservatives to deliver on ending rough sleeping (68%), a complete roll-out of fibre broadband (54%), and 50,000 more nurses (51%).

2. Public priorities for the Conservative Government

With the emphasis on Brexit during the 2019 general election campaign, it is unsurprising that a clear majority of both the British public (58%) and Conservative voters (62%) expect passing the Brexit legislation and leaving the EU to be the main priority for the new Conservative Government, as Chart 4 below shows. The NHS comes a distant second at 10% for all and 13% for Conservative voters. Labour and Liberal Democrat voters also have a similar view, with the majority (58% and 67% respectively) believing that Brexit will be priority.When discussing the main priority for increased public spending, the NHS comes significantly ahead of all other areas, as seen in Chart 5 below, with a firm majority of both the British public (57%) and Conservatives (58%) choosing it.

We tested public perceptions of whether the Conservative Government would and should prioritise key policy issues. As seen in Chart 6 below, the UK public is more likely to expect Boris Johnson’s Government to place low priority on almost all key policy issues, including climate change (47%), air pollution (48%), race and gender discrimination (57%), childcare (52%), pension reform (47%), Universal Credit (48%), integration of immigrants (46%) and human right violations abroad (61%). 

The only key policy area polled which the UK public are more likely to expect to be high priority than low priority is social care, with 41% stating this.

Hence, there is a significant gap between the level of priority that the UK public expects and wants to place on these key policy issues. The key policy issue the UK public wants to be a high priority is social care, with 73% wanting it to be a high priority issue. Coming joint second, 64% of people want climate change and air pollution to be a high priority issue. In addition, 58% of the public want pension reform to be a high priority issue, closely followed by childcare (55%) and Universal Credit (55%). 

3. Public priorities for supporting those on modest incomes

The British public is fairly divided on what the new Conservative Government should prioritise to support those on low and middle incomes. 

As seen in Chart 7 below, investing more in public services is the most popular choice among the UK public, with 27% believing this to be the best priority to support those on low and middle incomes. Next, 23% saw increasing the minimum wage as the priority for those on low and middle incomes, followed in third place by 16% of the UK public believe that cutting taxes is the best option. 

Notably, as Chart 7 illustrates, Conservative voters are almost equally split between these three top choices, but with increasing the minimum wage their preferred choice with 27% reporting this, followed by investing more in public services at 26%.


The variation of views on priorities across different income bands is also notable, as can be observed in Chart 7a below. Generally, those with lower incomes are more likely to report increasing the minimum wage than any other measure. For example, those earing below £10,000 and between £10,000 and £20,000 a year are more likely to say the increase in the minimum wage should be the priority compared to other priorities, including investing more in public services but especially cutting taxes.

Since the vote to leave the EU in the 2016 referendum, there has been a determination by politicians and policymakers – including in the Conservative Party – to better support so-called ‘left behind’ areas, which refers to a variety of post-industrial and coastal areas across England and Wales. 

When thinking about what would best help these ‘left behind’ areas, the UK public is also fairly split, though some options are notably more popular than others. As Chart 8 indicates, incentivising new businesses to move into such areas is the top choice among the UK public, with 42% supporting this. Investing more into public services is the second most favoured option and supported by 33%. In joint third is improving transport connections and funding training schemes, with both receiving support from 30% of the UK public. 

There is some variation across voters of different parties, with a majority of Conservatives viewing incentivising new businesses (51%) as one of the best ways to help people in ‘left behind’ areas, while Labour voters were more likely to choose investing in public services (44%). However, many of the prescriptions share relatively similar levels of support across the political spectrum.4. Public perceptions of the Conservative Party

The perceptions of the Conservative Party in the 2020s are quite varied, though their focus on Brexit has successfully entered public perception, with the description of ‘a Brexit party’ being the one used by most by UK respondents (39%). Chart 9 below demonstrates this. The next popular descriptions used are ‘an elitist party’ (27%) and ‘a far-right party’ (20%), but also ‘a one-nation party’ (16%).

It is worth noting that there is significant variation by how people voted in the last election, as Chart 9 highlights. Negative descriptions, especially of the Conservative Party being ‘elitist’ and ‘far-right’, are largely driven by voters of other parties. Conservative voters are more likely to report the Conservative Party as ‘a Brexit party’ (34%), ‘a one-nation party’ (31%), ‘a people’s party’ (25%) and ‘a moderate party’ (21%). Conclusion

This polling is a snapshot of UK public opinion at the start of the 2020s. It should be seen primarily as a warning for the Conservative Government, highlighting that the trust placed in it by its new voters in northern England and Wales is fragile. The Prime Minister is right to say that first-time Conservative voters have lent their support to him; he now needs to earn their trust.

Overall, the public is pessimistic about the direction of societal and economic issues over the next five years and believes that the Conservative Government will deliver on only some of the promises made during the 2019 general election campaign. There is a significant expectations gap on a range of environmental, social and welfare issues, with many wanting the Government to give them a higher priority than what is currently expected. 

At the same time, this polling suggests that the Conservative Government has significant room to exceed people’s expectations. The public’s policy priorities on helping those on low and middle incomes and left-behind areas are mostly in line with the Conservative Government’s agenda, including investing in key public services, improving transport connections and training opportunities, and attracting business investment. Should the Conservatives deliver on this domestic agenda, they are likely to maintain the trust of their new electoral coalition.

Anvar Sarygulov is a senior researcher at Bright Blue

 

Notes:

The full data tables for the polling can be found here.

We are grateful to Opinium for advising on and carrying out the survey.

Anvar Sarygulov: Brexit Party’s Exit

By Anvar Sarygulov, Centre Write, Politics

The announcement that the Brexit Party will not standing in all seats that the Tories won in 2017 has been seen by some as a game-changer. However, the most significant effect of Nigel Farage’s move is to increase the chances of a 2017 General Election redux.

By shoring up the defence of Conservative-held seats, but continuing to bleed Leave voters off in Labour-held marginals that the Conservatives need to win for a majority, a path to a hung parliament where Conservatives are the largest party is clearly visible. To understand why, let’s look at some London marginals.

We can use the data from an MRP model and polling constructed by Focalpoint this Autumn, which estimates party vote share at constituency level. An MRP model combines a large polling dataset (46,000 in this case) with the socio-demographic profile of each constituency to estimate a voting share in each seat. Focalpoint’s data is both plausible and reasonable given other polling data we have, so we will use it to illustrate the dynamics at play in London.

First, lets consider the supposed benefit of Brexit party candidates standing down to Conservative incumbents in London.

Table 1: Projected share for 2019 for Conservative-held seats in London where the winning share is <40%.

Seat Con 2019 Lab 2019 LD 2019 BXP 2019 Green 2019
Chelsea and Fulham 37.9 17.5 30.2 5.9 6.2
Harrow East 37.7 29.1 15.1 10.0 5.5
Chingford and Woodford Green 37.4 26.1 19.8 9.8 4.7
Finchley and Golders Green 36.0 25.1 26.2 5.0 5.4
Wimbledon 35.9 21.1 29.5 5.0 6.2
Cities of London and Westminster 35.8 22.3 27.0 4.9 7.7
Putney 35.1 22.1 27.2 4.7 8.7
Hendon 34.3 23.6 26.8 8.3 4.7
Chipping Barnet 33.2 26.8 25.0 7.8 5.0
Average change 2017-2019 -11.8 -17.7 17.3 6.1* 4

*Change from UKIP 2017 result

Source: Best for Britain, aggregated by Chris Hanretty (2019)

All of these marginal constituencies had majority support for Remain in the 2016 Referendum, some by an overwhelming margin (72.2% voted to Remain in Putney). Despite the heavily Remain profile of these constituencies and the average vote share loss of 11.8% from 2017, the Conservatives still are predicted to have at least a 6% margin on the second-place opponent in every constituency even if a Brexit Party candidate is standing. Hence, the benefits of the Brexit Party to stand down are small in Conservative-held seats due to the already significant polling lead.

But, should either Labour or Liberal Democrats surge, the decision by the Brexit Party will provide a benefit by shoring up Conservative margins. It must be noted, though, that the Conservatives are not guaranteed to get all Brexit Party voters, as can be seen with the experience of UKIP. In the 2017 Election, the Conservatives managed to secure less than half (45%) of people that voted UKIP in 2015, meaning that some could choose a different party. Furthermore, some Brexit Party supporters might simply choose to stay at home, just like the 30% of 2015 UKIP voters. So, the Conservatives should be carefully not to overestimate the potential boost.

In contrast, we should compare the effect of the Brexit Party continuing to stand in Labour-held marginals in London:

Table 2: Projected share for 2019 for Conservative targets in London held by Labour

Seat Con 2019 Lab 2019 LD 2019 BXP 2019 Green 2019
Croydon Central 33.7 31.0 14.6 12.1 6.3
Ilford North 33.1 36.8 13.4 10.9 3.6
Dagenham and Rainham 32.5 32.8 8.6 19.7 4.4
Enfield, Southgate 32.1 29.6 20.8 8.0 7.4
Eltham 31.8 30.9 16.7 13.0 5.5
Kensington 31.1 22.8 29.7 7.8 6.7
Battersea 31.0 25.5 31.2 3.8 6.6
Brentford and Isleworth 30.9 32.9 20.9 8.8 4.6
Average change 2017-2019 -8.8 -21.2 14.8 9.3* 4.7

*Change from UKIP 2017 result

Source: Best for Britain, aggregated by Chris Hanretty (2019)

As can be seen, the Conservatives could secure even heavily-Remain marginals such as Kensington and Battersea even with Brexit Party presence on their path to a majority. However, this is completely dependent on the Remain vote to be split and with retention of a large polling lead. The Conservatives in such seats are hostages to fortune and will have little chance to retake such seats if Labour has a resurgence by regaining voters from the smaller parties, which would be unsurprising.

The Conservatives also have a tough contest in the heavily-Leave seat of Dagenham and Rainham, as the Brexit Party siphons off Leave voters primarily from the Conservatives. It is indicative of the struggle that the Conservatives will face in many other traditionally Labour seats across the country, especially in Northern England and Wales, that had voted to Leave if the Brexit Party continues to stand there.

The Brexit Party decision to stand down in Conservative-held seats has some benefit of shoring up their margins, which will become more important if the Conservatives start to lose their significant lead. However, by continuing to stand in the Labour-held marginals that Tories need to win for a majority, it is easy to see how we can face a hung parliament similar to the one we have now if Labour vote strengthens even slightly.

Anvar Sarygulov is a Researcher at Bright Blue

Anastasia Kourtis: A beacon of hope for liberal conservatism in Europe

By Centre Write, Foreign, Politics

Liberal conservatism is under threat in Europe. Several former communist countries, such as Poland and Hungary, have elected right-wing governments, which academics have deemed ‘illiberal’, and at odds with liberal conservatism. The characterisation of ‘illiberal’ is usually associated with practices such as restricting immigration and violating the principles of judicial independence.

However, it is essential to remember that the economics of these countries are not friendly to the free-market. ‘Orbanomics’ in Hungary, for instance, advocates for the establishment of political control over the economy by emphasising re-nationalisation. Other European leaders on the right, such as the leader of the main opposition party in France, Marine LePen, have supported nationalist economic policies such as restrictions to free-trade and the nationalisation of banks.

While the state of economic liberalism might be dire on the European Right, a beacon of hope exists in Greece.

In July 2019, the Greek people elected a centre-right government after four and a half years of rule by a left leaning government. The new Prime Minister of Greece, Kyriakos Mitsotakis, has pledged to follow a free-market and pro-business approach. This includes lowering corporate income tax from 28% to 20% by 2020, lowering individual income taxes, and privatising the primary greek oil company Hellenic Petroleum S.A. among others.

During the campaign trail, Mitsotakis pledged to cut the Unified Property Tax, referred to as ENFIA in Greece, by 2020. In the first month in office, the new government managed to offer a 10-30% decrease in the tax, depending on the value of each popery, with lower-income households enjoying a more significant cut.

Another campaign promise that the new government seems to be moving forward with is the Hellinikon Project. This project plans to revitalise the abandoned greek Hellinikon Airport (which has been out of service since 2001), and the use of its lands to develop a multi-purpose hub. Investors are aiming to create a new “Athenian Riviera”, which will include residential communities, luxury hotels,a casino, shopping centers, museums, cultural venues as well as family venues. This eight-billion euro investment is expected to offer thousands of new jobs while also bringing in revenue for the government.

Almost twenty years after the last flight took off from Hellinikon airport, this land has not been taken advantage of. Development projects had been proposed, yet were stalled. According to the Greek Reporter, “a massive and unprecedented mountain of bureaucratic obstacles arose in the last few years, placing one problem atop the other, and preventing any investment [at Hellinikon] from actually taking place.” Bureaucracy is indeed an issue in Greece, and Mr. Mitsotakis’s party, while still in opposition, blamed the previous leftist Syriza government for not moving forward with the project on the grounds of not wanting foreign businesses involved.

Indeed, in 2015, Syriza MP Nantia Valavani called for the abandoned airport facilities to be renovated into a waste management facility, a statement which founded the deputy-minister for the Environment, at the time, in accord. Two years later, several Syriza MPs, including Mrs. Valavani, further objected to the project by stating that the old airport is of “archeological significance” and that its abandoned buildings should be “listed as protection for historical monuments.”

Even though the free market and liberal conservatism may be under threat in Europe, it is essential to remember that there is still hope. In the post-Brexit United Kingdom, it would be necessary for Conservatives here in the United Kingdom to shy away from the anti-free market tendencies we see in many places in central Europe.

Rather, the UK should focus on fostering private investment and large-scale and sustainable development projects that will add many jobs to the economy as the Greek case shows.

Anastasia Kourtis is currently undertaking a week’s work experience at Bright Blue. Views expressed by the author are not necessarily those of Bright Blue.

Peter Aldous: The Conservative Party can proudly say we have turned the page on poverty

By Centre Write, Politics, Welfare

We created a National Living Wage, helping millions of people across the country; we launched Universal Credit to simplify an outdated system of welfare; and unemployment is at a record low. We extended free childcare for working parents, and raised the income tax threshold so people keep more of the money they earn.

But in amongst these victories, as a government, and as a nation, we know there is more to be done. 

Universal Credit, for example, can be a force for good. It is a policy which shows government at its best: pragmatic, forward-thinking and unafraid of a challenge, no matter how big.  

But in order to make sure Universal Credit fulfils its potential, we must pay attention to the issues that could make a real difference to people needing its help. Time and time again from discussions with my own constituents in Waveney, I have seen first-hand how the built-in five week delay for a first Universal Credit payment is adversely impacting people’s lives. 

It’s an issue I feel strongly about. That’s why I’ve added my voice in Parliament over the past year to back calls to end the wait altogether. 

It’s clear that some of the most vulnerable people in our society are struggling with the wait and face real challenges in getting by day-to-day. This isn’t right. 

This week, a new report by the Trussell Trust revealed in unprecedented detail the scale and profile of food bank use – and showed how the impact of the five week wait for Universal Credit and the waning value of benefits are acting as key drivers of people turning to charity for that most basic of needs, food. 

The research found that over a quarter of households referred to food banks reported ‘a long wait for Universal Credit’ in the past 12 months. At least 15% of households were still waiting for it at the time of the survey. 

And the research found that increasing the value of working age benefits by as little as £1 a week reduces the numbers going to food banks.

While the report brings into sharp focus the struggles of people on extremely low incomes, it also highlights how food banks and other community organisations provide vitally important support to get people the help they need to get back on their feet. Communities are working together to help people who without that support, would have nowhere else to turn. 

We’ve shown we’re listening – the Government has introduced numerous changes to improve the roll-out of Universal Credit. We are right to adopt a ‘test and learn’ approach, but we must ensure that as lessons arise, we act on them: when the evidence is this clear, we must continue to adapt so that Universal Credit genuinely transforms people’s lives. 

This is why I’m supporting the call by the Trussell Trust and many others to end the five week wait as a first priority, while also restoring benefits to cover the true, and rising, cost of living.

As Conservatives, with our record on employment and commitment to social justice, we can make a real difference to the lives of people up and down the country.

Peter Aldous was the Member of Parliament for Waveney. Views expressed in this article are not necessarily those of Bright Blue.