Welcome to the UK general election campaign. Of course it doesn’t officially start for some time, but rest assured we are well underway. The recent Autumn Statement saw this writ large. Ostensibly still the time when the country is updated on economic growth and government finances, 2014’s was about as political as possible – very much about the months leading to May 7.
The Statement contained several measures designed to appeal to the core Conservative audience, address traditional weaknesses in the North of England and negate Labour’s most effective areas of attack on the government (additional monies for the NHS for example); and it contained a “rabbit in the hat”, in the form of Stamp Duty, that was meant to get the attention of those looking to buy a new home. It was canny and calculated, and showed why the Chancellor has one of the best political minds out there.
In many ways, however, the most interesting aspect of the positioning around the Statement has been Labour’s stance. The two Eds appear to be adopting a strategy that focuses on highlighting the commitments from David Cameron that have not been delivered, and taking a hard line on returning to a surplus in the next Parliament – and juxtaposing this with the pork-barrel politics of the Chancellor. In many ways the parties have swapped each other’s clothes – the Conservatives are promising to spend and Labour are saying the most important thing is getting rid of the deficit.
This has potential implications for the business travel sector. This is particularly clear if you read this quote from Ed Balls the day of the Autumn Statement: “I have said to you today... no promises which cannot be paid for, no unfunded spending commitments, no borrowing for capital spending in our manifesto, no spending unless taxes are raised to pay for it, or the spending is cut to pay for it.”
No borrowing for capital spending in the manifesto? That is a pretty risky move and essentially puts a question mark over High Speed 3, Crossrail 2 and, if not HS2 itself, then potentially the expensive bolt-ons that we know business travellers are keen on – linking HS2 directly into Heathrow and HS1.
It also has potential implications for tax cuts. If the priority is for deficit reduction, it’s highly unlikely that Labour will adopt the same split between cuts and taxation as the Coalition, so we should expect additional taxes and a reduced appetite for cuts. What will this mean for campaigns to eliminate Air Passenger Duty?
Will it mean consideration of more policies such as the ‘inbound levy’, or even a mooted London tourist tax? In the run-up to May, it is this new dynamic between a Conservative Party highlighting economic growth and investing in pet projects, and a Labour Party promising to tackle the deficit more forcefully that is the one to watch. The next set-piece is the Budget on March 19, where these arguments will get an airing again, but we should also see some of the details around spending plans for 2015-20 and the policies these may lead to.