Friday, 12 March 2010

Who wants a hung Parliament in the UK?

The UK general election is looming and looks set for 6 May. This election will take place in a situation where the condition of the UK economy and its public finances are dire. In spite of this, recent opinion polls suggest that the two main political parties are neck and neck and thus we face a real possibility that no party will gain an overall majority and a “hung” Parliament will ensue. A number of views are put forward which need to be discussed.

Firstly there is a view put forward that the electorate wants a “hung” Parliament and that this is why the polls are the way they are. This is clearly fantasy since it implies some form of mass conspiracy by the electorate to “fix” the opinion polls such that they point towards a “hung” Parliament. I suggest that the current economic situation in the UK is such that most people do not want a “hung” Parliament but want a government with a clear mandate to sort things out. The issue is that the electorate is completely divided about which party is best placed to do that.

The second issue concerns the effectiveness of a “hung” Parliament in dealing with the UK’s severe economic problems. The key question seems to be whether the appropriate response to these problems should be:-
• immediate and significant reductions in public spending in order to stabilise exchange rate and credit ratings, or
• more gradual reductions in public spending to avoid destabilising the fragile economic recovery which might make the overall situation worse, and require even more painful reductions.

This is a very delicate balancing act and it seems the parties are divided. The Labour Government would seem to support action to deal with the budget deficit but gradually over a two Parliament period. The Conservatives having taken a stronger line on the need to address the level of public sector deficit quickly hesitated over the advice of some notable international bodies like the IMF, arguing that too quick a reduction would create greater recessionary impact, but latterly seem to have returned to the need to cut the deficit more quickly than their opponents.

The “hung” Parliament model is often postulated as the best option since it would encourage all parties to “work together in the best interests of the country”. In my view, this analysis is false. Firstly, even if the Parliament is “hung”, there is no guarantee of any form of coalition government appearing. In the 1974 election, Harold Wilson the then leader of the Labour Party had the largest number of seats but no overall majority. Wilson decided not to have a coalition but to take power as a minority government. Secondly, the absence of fixed term Parliaments in the UK means that all parties would know that another general election would be imminent once the then Prime Minister decided the signs were positive for his party. In 1974, Wilson called a second general election seven months after the first one and won with a small majority. The consequences of a “hung” Parliament today are probably that between the inevitable two general elections, no party will want to be held responsible for any decisions which would be unpopular and would come back and haunt them at election time. Contrast this with Germany where a grand coalition governed, reasonably effectively, for a four year period between 2005-2009 because of fixed term Parliaments.

In the current economic and fiscal climate and the nervousness of the financial markets, I suggest the last thing the UK wants is a “hung” Parliament. Both the financial markets and the electorate would probably agree that what is wanted, first and foremost, is clarity about the direction of travel.

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