Partner, Head of Banking & Restructuring
Out-Law Analysis | 18 Sep 2019 | 10:12 am | 3 min. read
With a UK general election increasingly likely in the months ahead it is right and reasonable that companies are now focusing, not only on the implications of the potential impact of Brexit, but on a potential change in government.
Should Labour be victorious in such an election, their plans for nationalising rail, energy and water services in England will evidently have a major impact on key regulated industries. While some have proposed that Labour leader Jeremy Corbyn and shadow chancellor John McDonnell would behave differently in government, having observed two prime ministers at close quarters, my judgement is that crossing the threshold of Downing Street tends to reveal a prime minister’s character more than change it.
So companies should take seriously the policies Labour are setting out in anticipation of an election because their manifesto pledges could mean the implementation of the most radical infrastructure changes in decades.
Having observed two prime ministers at close quarters, my judgement is that crossing the threshold of Downing Street tends to reveal a prime minister’s character more than change it.
In practice, both the main parties face a tough challenge to win an outright majority if an election is held in October, November or early December. Historically a Labour majority has required a significant number of seats across the urban areas of England, Wales and in Scotland, where in the latter nation the polling remains tough. It’s only on the foundation of support in these traditional Labour heartlands that in recent decades the party has commanded a majority in the House of Commons.
A more likely scenario would be that Labour becomes the largest party but falls short of an overall majority and is therefore forced to form a formal coalition government or, even more likely, an informal confidence-and-supply arrangement involving other opposition parties.
So it is right that companies consider what a Labour agenda for the country would mean for their business moving forward.
Prime minister Boris Johnson's election strategy appears unchanged by recent tumultuous weeks in which he lost his parliamentary majority, lost control of House of Commons business and lost crucial votes that have limited his options on Brexit.
He still looks set to fight a general election on a dividing line of 'people versus parliament', where he will claim to represent the people. He sees his task as healing the divide on the right of British politics by appealing to Brexit Party voters while betting on 'remain' voters being divided in their support between the other parties. This populist path is what he sees as his route to victory.
But this approach has a significant cost. He is willing to trade seats and votes in more remain-minded affluent and metropolitan areas in return for seats and votes in economically left-behind areas which voted to leave the EU. This trade, however, carries real risks over the long term for the Conservative Party, which ultimately needs both groups of voters for sustainable majorities.
The present polling makes happier reading for the SNP and Liberal Democrats with both parties hoping to pick up votes and seats. Given that Boris Johnson has just thrown 21 MPs out of his own party, even to sustain power he has to take enough seats directly from Labour to compensate for these losses, and win even more if he is to win a majority.
So while it seems near-certain that the UK will be faced with a general election before the year is over, exactly how we get to an election being called is less clear. We are in politically uncharted waters where a prime minister who says he does not want an election is trying hard to get one, and an opposition leader who has said he wants one is working to avoid it.
Johnson's hands are tied by the Fixed Term Parliaments Act, but he still has less-conventional options for forcing an election. If he cannot convince parliament to grant one on the basis of the FTPA, which requires a two thirds majority, he could yet take the extraordinary decision to table a confidence vote and lead his party in voting against his own government. Alternatively, he could resign as prime minister to avoid having to seek the extension that parliament demanded last week, leaving Jeremy Corbyn or someone else as prime minister on a caretaker basis, ahead of an election.
Nobody, including cabinet members or MPs, yet knows what choices he will make. Yet Johnston's strategy for fighting the election is already clear and seems unlikely to change. With the political climate and our parliamentary system being what they are, the general election could yet result in a Labour Party in office - whether on a minority or majority basis.
Douglas Alexander is a senior advisor to Pinsent Masons, the law firm behind Out-Law, a fellow at Harvard Kennedy School, and former Labour secretary of state in Tony Blair and Gordon Brown's governments.
12 Sep 2019
11 Sep 2019
Partner, Head of Banking & Restructuring