What’s going to happen on Thursday?

In just over 48 hours, we will know the result of the General Election, but its broad outline is already clear - the polls rarely get things exactly right (they failed to predict just how well Boris Johnson would do in 2019 or how well Jeremy Corbyn would do in 2017), but such is the size of Labour’s poll lead that even if the polls are a bit off we are still going to wake up to a Labour Government on Friday morning. What’s harder to predict is the exact scale of Labour’s victory and how well each of the other parties will do, but here’s our best guess.

Getting our excuses in early

Predicting how many seats the Conservatives will win - and therefore the size of Labour’s majority - is particularly difficult this time because of the scale of the collapse in Conservative support. They are on course for their lowest share of the vote in modern history. Why does that matter? Because under our first-past-the-post electoral system, once the Conservative Party’s share of the vote falls below 25% very small further reductions in its share of the vote lead to large changes in the number of seats it wins - in other words, you only have to be a bit out on your prediction of the Conservative share of the vote to be quite a long way out on your prediction of how many seats they will win (and therefore on your prediction of the size of Labour’s majority).

The headline story: an unprecedented Labour majority and an unprecedented defeat for the Conservatives

The polls may differ on exactly how big they are going to win, but it is clear that Labour are going to win by a landslide - and probably a larger one than Tony Blair achieved in 1997. They will therefore likely be in government for at least two terms (we say “likely” because we would have said the same about Boris Johnson immediately after his victory in December 2019, and that would have under-estimated Johnson’s capacity for self-destruction).

For the Conservatives, the best case scenario is that they win a similar number of seats to 1997 (165). That would not be wholly uncharted territory, and would at least be enough for them to mount an effective opposition (the Official Opposition needs to shadow 90-odd Commons Ministers and because some MPs will either not want frontbench jobs or not be suitable, you probably need 130-140 MPs to have 90-odd that are appointable). The worst case scenario is that they come third behind the Liberal Democrats (in which case, both Rishi Sunak and Liz Truss could lose their seats). That would make it much harder to recover.

These scenarios imply a Labour majority of somewhere between 160 and the high 200s (by way of reference, they got a majority of 179 in 1997).

We think the Labour majority will be towards the lower end of this scale - there is some evidence that Farage’s comments about Ukraine and the deluge of stories about the views of Reform candidates have halted or maybe even slightly reversed its surge (and the worse Reform do, the better the Conservatives do), and there is also some evidence that former Conservative supporters who are currently undecided are increasingly worried about Labour winning by a landslide.

We should pause for a moment to reflect the enormity of what is about to happen - no party in living memory has won an election from so far behind.

Although Labour will make unprecedented gains, they may lose the odd seat to the Greens or independents (Shadow Secretary of State for Culture, Media & Sport Thangam Debonnaire is vulnerable to the Greens in Bristol Central, Shadow Secretary of State for Justice Shabana Mahmood is under pressure from an independent campaigning on Gaza in Birmingham Ladywood and Labour is under pressure in a number of other seats with large Muslim communities).

‘Portillo moments’

Lots of Cabinet Ministers are going to lose their seats. There may be a few surprises because at an individual constituency level we are likely to see some very variable swings. This variation will be strongly correlated with variations in Reform’s support around the country - because Reform draws most of its support from former Conservatives, in those areas where Reform does well the swing from the Conservatives to either Labour or the Liberal Democrats will be much larger.

The Liberal Democrats back as a serious force in Parliament

The Liberal Democrats will win a lot more seats without getting many more votes. If that seems paradoxical, the explanation is tactical voting: in many constituencies Liberal Democrat supporters will vote Labour to make sure the Conservatives don’t win, but in a few places Labour supporters will vote Liberal Democrat to achieve the same end, so the Liberal Democrats will get a better return in seats for a given level of votes. We expect them to do about as well as they did in 2005 (62 seats), which was a high-water mark for them. Ed Davey has been widely mocked for his various stunts, but the result will be a vindication of his approach.

The strategic challenge for the Liberal Democrats in the next Parliament will be how to shift from being an anti-Conservative Party to a party in opposition to a Labour Government.

Reform: lots of votes, not so many seats

We expect Reform to get a similar share of the vote to the Liberal Democrats (13 or 14%?), but to win far fewer seats (although we do expect Nigel Farage to win in Clacton). Predicting how many seats Reform will win is perhaps the hardest thing to do - we don’t know how well the various MRP polls have picked up concentrations of support for them in particular constituencies. They may win a few more seats than most of the MRPs are predicting.

A bad night for the SNP as well as the Conservatives

In Scotland, we expect the SNP to win fewer than half the 59 seats. It will not therefore be able to claim the result is a mandate for a second independence referendum, so that issue will be kicked into the medium grass (we say “medium grass” because underlying support for independence hasn’t declined, so when Labour inevitably becomes unpopular at some point in the future there is every chance that the SNP will recover and the possibility of a second referendum will be back on the agenda).

The DUP’s difficulties may present a headache, but also an opportunity, for Keir Starmer

In Northern Ireland, the DUP may well lose seats (including their new leader Gavin Robinson). We expect Sinn Féin to hold their seats and therefore become the biggest or level-biggest Northern Irish party at Westminster (although they don’t take up their seats), as they already are at Stormont and in Northern Irish local government. The result may well push the DUP into demanding further changes to the Northern Ireland Protocol, which would be an immediate headache for Keir Starmer (although he could turn it to his advantage, arguing that there are no more Northern Ireland-only fixes available and therefore using it to press for some of the changes to the overall EU/UK relationship that he wants).

Cue concerns about the electoral system

If we are right about the above, this will be the least proportional result ever. It is likely Keir Starmer will get a lower share of the vote than Theresa May in 2017 - and possible that he will get a lower share of the vote than Jeremy Corbyn in 2017 - and yet win a larger majority than Tony Blair or Margaret Thatcher ever achieved. If that also seems paradoxical, the explanation is that our electoral system rewards parties based on relative performance, not absolute vote share - in 2017, the Conservatives got 42.3% but Labour were only just behind on 40%, whereas this time the opposition to Labour is completely fractured. First-past-the-post works well in a two-party system, not so well in a three party system and it really struggles once you have more than three parties getting significant shares of the vote, particularly if as now one is more popular than any of the others. The result will prompt much talk of the case for electoral reform, but it is hard to see Labour adopting that cause when the current system is so clearly working in its favour.

It will also prompt much discussion about Labour’s mandate. In one sense that mandate will be very strong - Labour will win nearly two-thirds of the seats - but their vote share will be one of the lowest achieved by a governing party in modern history. They will have won because the current Government is so unpopular, not because of any real enthusiasm for them, and they in turn could become unpopular quite quickly if they don’t deliver the change they are promising.

What will all this mean for the future of the Conservative Party?

The size of Labour’s victory will influence the contest to succeed Rishi Sunak - several of the would-be candidates (Penny Mordaunt, Grant Shapps and Robert Jenrick) may lose their seats.

We think it is less likely than was the case a few months ago that the Conservatives will seek a merger with Reform. Had Nigel Farage sat the election out, he would have been well positioned to portray himself as a unifying figure, settling the Conservatives’ and Reform’s differences. As it is, he has tried to destroy the Conservative Party - and his comments on Ukraine have reminded those who agree with him on Brexit and immigration that he does not share their world view on everything.

And finally, were Labour too cautious?

If Labour does win big, it is bound to intensify the debate about whether they have been too cautious in their manifesto and unnecessarily boxed themselves in. We have some sympathy with this argument - as well as loosening the fiscal rules to allow themselves to borrow more to fund capital spending, they are likely to have to increase taxes by more than they have promised and/or deliver spending cuts in some areas, leading to either a betrayal narrative on taxes and/or a “No better than under the Conservatives” narrative on public services - but of course it is much easier to say they have been too cautious now we know they are going to win big than it would have been for them to risk being more bold several months ago when the outcome was less clear cut.

Once we have the results and we’ve listened to Keir Starmer’s first speech as Prime Minister outside that famous black door, we’ll post a follow-up to this post setting out what the change in government will mean for public policy.

If you are interested in more insight like this, NorthStar Advisory produce a weekly report for their clients on what's happened in UK and geopolitics and, more importantly, why it happened and what might happen next. We are making those reports available to everyone for FREE until mid-July given the interest in the UK election. If you would like to be added to the mailing list, please contact northstar@northstaradvisory.uk.

What Will Happen To The Conservative Party After It Loses?

Conservative MPs know their party is headed for defeat - possibly a very heavy one - on 4 July, and their minds are already turning to what the party should do in the aftermath of that defeat.

The Omens Are Not Good

History tells us that parties nearly always initially draw the wrong lessons from defeat (think Labour in 1979, the Conservatives in 1997 and Labour again in 2010); it normally takes one or two more defeats before they finally get the message. And it may be even harder for the Conservatives this time - they are caught in an electoral pincer with Labour and the Liberal Democrats to their left and Reform to their right, and as a result have no good strategic options.

Braverman's 'Unite the Right' Strategy

In an interview with The Times on Monday, former Home Secretary Suella Braverman set out her preferred strategy: she argued that there was “not much difference” between Reform and Conservative policies and that the two should therefore merge because “we shouldn’t be divided on this side of the political spectrum”. Expect others such as Priti Patel and Jacob Rees-Mogg to adopt this ‘unite the right’ mantra.

There are two problems with such a strategy however: first, there is evidence that some Reform voters wouldn’t vote Conservative even if there were no Reform; and second, some current Conservative voters would stop voting for the party if Nigel Farage had a leadership role. In other words, you can’t just add the Conservative and Reform shares of the vote and assume that’s what a merged party would get - the Conservatives would do better with Farage on board, but unless Labour seriously messes up they would probably also be condemning themselves to perpetual opposition.

But Braverman’s critics have to acknowledge that she has a point: merging with Reform may not be the answer, but it will be very hard for the Conservatives to get more than 40% of the vote while Reform is on its right flank. The right is currently divided in exactly the same way the left was in the 1980s after the formation of the SDP - and that division on the left allowed Margaret Thatcher to win two landslide victories on just over 42% of the vote.

What Is Farage Up To?

If the Conservatives are unsure how to respond to the huge hole Boris Johnson and Liz Truss have left them in (and Rishi Sunak has proved incapable of extricating them from), Farage has a plan - indeed he has three of them. He is not stupid: he knows full well that Reform is unlikely to win many seats (though he may win in Clacton), and that the effect of his intervention will be to increase the size of Labour’s victory. His objectives is to destroy the Conservative Party and for Reform to take its place, as happened in Canada in 1993. But if that doesn’t work, he has two other options: a leader like Braverman might open the gates and let him in; or, if Sunak is succeeded by someone who is hostile to him, he can use his support among the shrunken Conservative grassroots to try to mount a hostile takeover.

What is not clear is whether his decision to stand in this election and take over the leadership of Reform from Richard Tice will help or hinder these plans. Thus far, it has clearly boosted Reform in the polls and if that is sustained through to polling day it will mean more Conservative MPs losing their seats. But if all he does is wound it deeper rather than destroying it, he may find that many of those Conservatives who do get elected are deeply hostile to him. The right of the party have spent years deluding themselves that Farage is an ally - Patel famously danced with him at last year’s Conservative Party Conference. Now he has made it clear that he is trying to destroy them (“Priti Patel represents a party that let 2.4 million people come into our country in the last two ears - sorry Priti, you haven’t protested enough”). Will they forgive him?

Why Does Any of This Matter?

At first glance, the internal debate within the Conservative Party after the election may not feel that important - after all, the party may well be out of power for a generation. But it matters because it will determine what type of opposition Labour face - and given Keir Starmer’s caution, that is likely to have some impact on the policies Labour pursues. A Conservative Party that turns its back on Farage and tries to re-establish itself on the centre-right will present a very different challenge to a populist right Conservative Party led, or heavily influenced by, Farage.

The Trump Factor

There is one final factor to bear in mind: what happens in the US in November. If Donald Trump wins, the right will argue that the Conservatives should ape his strategy; if he loses to an historically weak Democrat candidate, that argument will be much harder to make.

Brexit destroyed the Conservative Party’s coalition. It thought it had found a new one in 2019, but maybe that was only true for as long as Jeremy Corbyn was leader of the Labour Party. It will have to decide after the election whether to keep trying with the new coalition or go back to its old one.

If you are interested in more insight like this, NorthStar Advisory produce a weekly report for their clients on what's happened in UK and geopolitics and, more importantly, why it happened and what might happen next. We are making those reports available to everyone for FREE until mid-July given the interest in the UK election. If you would like to be added to the mailing list, please contact northstar@northstaradvisory.uk.

Emerging Economy Elections

2024 is an exceptional year of elections, most in the developing world. Democracy has been in retreat globally over the last decade. But recent elections in several major emerging economies have shown that democracy is more resilient than sometimes thought. 

Surprise Indian Election Result

Prime Minister Narendra Modi’s BJP emerged from India’s elections last week as the largest party, but failed to secure the 272 seats needed for outright victory. Modi not only failed to meet the target the BJP had set of 370 seats, but fell back significantly from their 303 seats in the last election. Opposition parties who looked disorganised and on the back foot performed better than predicted by the (notoriously unreliable) Indian polls, forcing Modi into a coalition with his National Democratic Alliance (NDA) allies.

It is the first time since 2014 that the party has been unable to govern alone, piercing the aura of supremacy that Modi has built up and demonstrating that his self-confident, upbeat Hindu nationalist campaign did not resonate with large parts of the population in more mixed areas of the country, where bread and butter local issues proved decisive.

The outcome is good news for Indian democracy. There were legitimate concerns about what a large BJP majority would mean for the authoritarian tendencies of Modi. It is a significant setback for Modi, but it is too early to assume he is on borrowed time. He is only the second Prime Minister to secure three consecutive terms in office, and the opposition Congress Party - which has ruled for much of India’s modern history - still secured fewer than half the seats of the BJP. 

It will, however, complicate some of the economic measures, particularly in relation to land and labour market reform, which India will need if Modi wants to continue growing India’s industrial sector. 

President Obrador’s Protégé Wins in Mexico

Claudia Sheinbaum of the left-wing Morena party won the presidential election to become Mexico’s first female leader, having secured 59.1% of the vote after an extremely bloody run-up to the elections. Sheinbaum succeeds her political mentor Andrés Manuel López Obrador (AMLO) and has promised to continue his agenda - “more rights, a welfare state, education, health, access to housing, and that a living wage is a right, not a privilege”. Markets are concerned that Sheinbaum will extend AMLO’s state-centric economic approach and entrench the party’s dominance of Mexican politics in ways unhealthy for democracy. On the face of it, however, Sheinbaum does not have the pedigree of a national-populist - her previous roles include working as an author for the IPCC.

ANC Fails to Secure a Majority

These two major emerging economy elections follow those of South Africa two weeks ago and Indonesia earlier this year. In South Africa, the ANC comprehensively lost its majority, slumping to around 40% of the vote. When apartheid ended in 1990, the advent of ‘normal’ politics, with non-ANC parties progressively growing in importance, was seen as inevitable if the country remained a functioning democracy. That in itself, however, was not inevitable; and while it has taken longer than anticipated, it is testament to the strength of South Africa’s democracy that it has happened.

There are major questions about what happens next in all of these countries. For example in South Africa, what coalition can the ANC form and will Zuma’s party resort to violence? In Mexico will Sheinbaum extend AMLO‘s approach or move towards the centre? But in these recent elections the incumbents and main opposition have accepted the results and are getting on with the business of forming a government. Democracy in these major emerging economies may be imperfect, but is functioning. It remains to be seen whether the same holds true in the most important elections this year in the US.

If you are interested in more insight like this, NorthStar Advisory produce a weekly report for their clients on what's happened in UK and geopolitics and, more importantly, why it happened and what might happen next. We are making those reports available to everyone for FREE until mid-July given the interest in the UK election. If you would like to be added to the mailing list, please contact northstar@northstaradvisory.uk.