Given we have a government where major economic and social policies are very much to the right of the political spectrum, Simon Wren-Lewis asks how we can account for the rise of UKIP. He argues that much of their popularity comes from straightforward dissatisfaction with falling living standards and a lack of good jobs. This is expressed as hostility towards immigration and welfare recipients, in part because the tabloid press suggests this is the cause of these problems rather than it being the result of government economic policy.
The UK Independence Party (UKIP) received a quarter of the vote in the recent council elections. UKIP has been described as the UK equivalent of the Tea Party movement in the US. Its policies are certainly very much to the right. Large tax cuts (possibly one flat rate) financed by huge reductions in public spending, except for defense spending which would increase, a five year freeze in immigration, a return to coal based power stations and no more wind farms, more prison places, and so on. Unlike the Tea Party, UKIP currently fights against the Conservative Party rather than working within it, but too much should not be made of this difference. UKIP’s leader says that he could cooperate with the Conservatives if they ditched Cameron as their leader, and there is some sympathy for UKIP’s aims within the Conservative Party.
One common reading of UKIP’s rise is that it represents the disaffected right wing of conservatism, generated by Cameron’s attempt to move the Conservative Party to the centre ground. However there is one problem with this interpretation – the Conservative Party has not moved to the centre ground. Apart from the odd token issue like gay marriage, the supposed move to the centre was just spin. Under the cloak of the need to reduce debt, the government has embarked on a programme to shrink the size of the state that goes well beyond anything attempted by Margaret Thatcher. Reforms to the National Health Service and education involve the large scale private provision of services or governance.
In terms of the distribution of income, the Conservative Party seem happy with increasing inequality and poverty. The 50% tax band on top incomes was reduced to 45%, while welfare spending is cut. The impact on child poverty will emulate what Margaret Thatcher achieved, according to the latest analysis from the Institute of Fiscal Studies (IFS) released today. Updating figures that I reported recently to take account of the latest welfare cuts, the IFS estimate that the percentage of children in poverty (in families with incomes 60% below the median) will rise from 17.5% in 2010 to 23.5% by 2020. Crucially, according to the IFS the rise in this measure of relative child poverty is entirely the result of the tax and benefit reforms introduced by this government. This is, quite literally, a government created increase in child poverty.
So if we have a government where major economic and social policies are very much to the right of the political spectrum, how do we account for the rise of UKIP? One possible story is that the Conservatives are a victim of their own spin. In trying to ditch the image of the ‘nasty’ party that came to be associated with the Thatcher era, they have alienated those that rather liked her openly right wing style. The parallels with the US may be quite close. Where the Tea Party is associated with, and definitely encouraged by, Fox News and talk radio, so the values of UKIP are also the values of the UK tabloid press, by which we essentially mean Murdoch’s Sun and the Daily Mail.
Yet there is one key feature of UKIP which has no US parallel, and that is in its name – independence from the European Union (EU). Since Thatcher’s time the Conservative Party has been seriously split in its attitude to the EU. The leadership knows that a decision to exit the EU will almost certainly have serious negative consequences for the economy, which is why most business leaders would be horrified by the prospect of leaving. However the tabloid press have run a relentless campaign to highlight any negative aspects of EU membership. It has to be said that Eurozone governance in particular gives them plenty to work with, but when that is not enough, then in true tabloid style stories are made up. While the Conservative leadership seems in its element in going along with the tabloid attack on the welfare state, when it comes to the EU, the game becomes appeasement.
How all this turns out may depend on how the economy performs over the next two years, and how effective the Labour Party are at shifting the public debate. If the recovery is strong, and we see more of this kind of political naivety from Labour (yes, Ed did not read my post on the B word), then the tabloids will push Cameron as far as they can on Europe, but then rally round to support the Conservatives at the election. On the other hand if the recovery is weak, and if Labour is more effective (like here) and looks like winning, then the tabloids may continue to encourage UKIP, in the hope of engineering a reconciliation of the right under a new Conservative opposition leader hostile to the EU.
But these are dangerous games. Much of UKIP’s popularity comes from straightforward dissatisfaction with falling living standards and a lack of good jobs. It is expressed as hostility to immigration and welfare recipients, in part because the tabloid press suggest this is the cause of these problems, rather than it being the result of government economic policy (some good posts on these tabloid myths: NEF here, the Guardian here, Ian Mulheirn here, and much more detail from Alex Marsh here).
Even if the recovery is strong and Labour opposition weak, this may not produce enough to enable the tabloids to put this genie back in its bottle. They may find it as difficult to control those who recently voted UKIP as the Republican Party has found it impossible to control the Tea Party.
This article was originally published on Simon Wren-Lewis’s Mainly Macro blog.
Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting.
Simon Wren-Lewis is a professor at Oxford University and a Fellow of Merton College. He began his career as an economist in H.M.Treasury. He has published papers on macroeconomics in a wide range of academic journals including the Economic Journal, European Economic Review, and American Economic Review. His current research focuses on the analysis of monetary and fiscal policy in small calibrated macromodels, and on equilibrium exchange rates.
