LET the battle commence. Gordon Brown will today go to Buckingham Palace to ask the Queen to dissolve parliament, paving the way for a general election on 6 May. It will be a hugely important and exciting contest; it will be the first time since 1992 that a general election will be monitored so closely by the financial markets and global investors. And while the gulf between the parties is not as large as it once was, the differences are still sufficiently important to ensure Britain would be a substantially different country in five years’ time depending on who wins next month.
The biggest change of the past couple of weeks has been the Tories’ extraordinary recovery and Labour’s growing disarray. The latest YouGov/Sun poll out this morning gives them a 10 per cent lead over Labour. David Cameron’s party is on 41 per cent, the first time it has been over 40 per cent since early January and only 3 points or so below the levels it used to get in its 1980s heyday. There are two reasons for that: the Tory’s policy to reverse most of Labour’s proposed national insurance hike and the fact that the party’s overall message has become clearer and easier to distill into one liners. This has gone down a treat with an electorate that is hungry for a change, but which until recently did not really understand whether (or how) they would be better off under the Tories.
In contrast, Labour has slumped to just 31 per cent, after Brown made the near-suicidal decision to go on the offensive on national insurance, defending his decision to hike the tax despite it being roundly condemned by just about every business organisation, CEO and reputable economist. The line being peddled by Labour – that Britain cannot afford to cut the tax given the size of the deficit – has failed to convince, and no wonder. It is basic economics that the more you tax something – in this case, jobs – the less you get of it – in this case, employment. Research by Policy Exchange using models from Oxford Economic Forecasting reveals that hiking national insurance is the worst possible way to bolster the government’s coffers. There is no reason why spending cuts – including to waste – cannot be used to reverse the most damaging tax hikes as well as cut the deficit, which is now the Tory position.
Once again, Cameron has bounced back – and once again, tax cuts have turned out to be part of the answer (last time it was inheritance tax). He has also come up with a much better campaign. In fact, Sir Martin Sorrell, boss of advertising giant WPP and a man who knows a thing or two about communications, told me last week that he agreed that the aggressive new posters (by M&C Saatchi) are far better than the ones from a different agency unveiled earlier this year, towards which he was dismissive.
As the election campaign kicks off in earnest, City A.M. will position itself firmly on the side of our readers, sifting through the tidal wave of claims and counter-claims, spin and propaganda from all sides that characterise all election campaigns. Our own worldview is straightforward: we support the City, London’s financial and business community, capitalism and a real free-market economy with no corporatism, bailouts or handouts. We stand for meritocracy, hard work, personal achievement, enterprise and personal freedom and will be judging politicians of all parties on how they measure up to these values. Hold on tight; it’s going to be a great ride.