For the first time in 25 years, I have failed to vote in a local or General Election. Unfortunately, I was working hard yesterday and then went out in the evening, so I completely forgot to cast my vote. Oops!
In my part of England, the Conservatives gained a couple of seats from the Liberal Democrats. This means that I now have a Tory council instead of a 50/50 alliance with no overall control, so maybe my vote would have mattered…
Labour leaps ahead
As I write, results are still coming in, but 136 of 181 councils have already declared their outcomes. Here’s how the UK’s top five parties got on yesterday:
|Scottish National Party||0||0||32||+6|
As you can see, Labour has made strong gains throughout the country, gaining control of 28 councils and adding 614 councillors to its ranks so far.
Labour’s gains have come largely from a backlash against the Conservative/Liberal Democrat coalition. Many voters expressed their disapproval of policies at the national level by voting against the government at the local level.
The Tories lost control of 12 councils and shed 350 councillors, while Nick Clegg’s party lost control of Cambridge and shed 193 councillors.
In Wales, Welsh nationalists Plaid Cymru lost control of one council and shed 11 councillors, while the Scottish National Party gained six councillors, but no councils.
Meanwhile, Boris Johnson is expected to beat Ken Livingstone once again to become Mayor of London when the final result arrives this evening.
There may be trouble ahead
Following these results, pundits project the share of the vote in England will be: Labour 38%, Conservatives 31% and Lib Dems 16%. In 2008, their shares were Labour 22%, Conservatives 40% and Lib Dems 24%, so there has been a big swing towards Labour.
These results make uncomfortable reading for Prime Minister David Cameron and Deputy Prime Minister Nick Clegg, who worry about surging support for Labour. Chancellor George Osborne should be also nervous, as these results suggest that Brits may be tiring of his austerity programme.
Will the Chancellor change course?
As we know, the Chancellor is committed to his deficit-cutting strategy aimed at bringing the UK’s enormous public spending under control.
In the 2011/12 tax year, the UK government spent £126 billion more than it earned, increasing our national debt by more than £10 billion a month. However, through cutbacks in public spending and rising taxes, the Chancellor aims to reduce this budget deficit to £91 billion in 2012/13, falling to £21 billion in 2016/17.
Then again, in light of this vote of no-confidence in the coalition, Osborne may be forced to tone down his tough stance on public spending.
Mr Market is watching
If government ministers feel that the electorate is increasingly unhappy with cuts to the NHS, education and social welfare, then the Chancellor may loosen the public purse strings. This would mean shallower cuts to essential public services, aimed at winning back disillusioned voters.
Then again, Osborne has to tread a fine line between public opinion and the reaction of financial markets. Right now, the UK enjoys the world’s highest credit rating (AAA), enabling it to borrow money very cheaply at fixed rates around 2% a year for 10 years.
However, if George Osborne decides to loosen the fiscal taps, then this will blow deficit forecasts out of the water. Put simply, if the Chancellor decides to spend a little more, then our national debt will rise faster and, eventually, the UK will lose its prized AAA rating.
At this point, the cost of government borrowing will increase and this will be followed by rising mortgage rates and higher lending costs for individuals and businesses. That means higher monthly mortgage repayments, more expensive business loans – and better rates for savers, too.
That’s why I suspect that Osborne will stick to his guns and keep going on his path to austerity. If he doesn’t, then the ‘bond vigilantes’ will make him – and the UK – pay dearly.
What about your Council Tax?
Earlier this year, Conservative MP Eric Pickles, the Secretary of State for Communities and Local Government, urged councils to freeze their Council Tax bills for 2012/13. Many councils chose to ignore Pickles and raised Council Tax, rather than cut back on local services.
In the past, Conservative councils have tried to keep a tighter grip on local spending than their Liberal Democrat rivals and Labour in particular. Hence, with Labour set to seize control of more than 30 extra councils, many taxpayers will be worried about future Council Tax rises.
Voters should indeed worry about higher Council Tax bills, because they keep rising relentlessly. The average yearly bill doubled between 1997 and 2007, rising to £1,100. Since then, bills have continued to soar, with three in seven households (43%) seeing their bills go up this year.
For the record, Council Tax for an average band D home in England will be close to £1,444 in 2012/13. Although the average bill in England rose by just 0.3% this year, more Labour-run councils could mean higher local spending. If this were to happen, then next year’s Council Tax bills could rise more steeply, hitting hard-pressed households even harder.
No U-turn ahead
In summary, despite this dramatic swing to the left, the coalition government is highly unlikely to divert from its stated goal of balancing Britain’s books.
Then again, government MPs must be desperately hoping that the UK’s finances and economy are well on the mend by 2015. Otherwise, they could lose their seats in the next General Election!