Consequences of the UKIP by-election win

 

WEEKLY COMMENT 20-11-2014

By Barry Edwards

Consequences of the UKIP By-election Win

 

The by election at Rochester and Strood has delivered another win for the United Kingdom Independence Party (UKIP) giving them two seats in the UK parliament. Commentators were predicting a landslide victory but the result was not as convincing as many people were expecting.  Below are the by-election results in full;

Mark Reckless (UKIP) 16,867 (42.10%)

Kelly Tolhurst (C) 13,947 (34.81%, -14.39%)

Naushabah Khan (Lab) 6,713 (16.76%, -11.70%)

Clive Gregory (Green) 1,692 (4.22%, +2.69%)

Geoff Juby (LD) 349 (0.87%, -15.39%)

Hairy Knorm Davidson (Loony) 151 (0.38%)

Stephen Goldsbrough (Ind) 69 (0.17%)

Nick Long (PBP) 69 (0.17%)

Jayda Fransen (Britain 1st) 56 (0.14%)

Mike Barker (Ind) 54 (0.13%)

Charlotte Rose (Ind) 43 (0.11%)

Dave Osborn (Pat Soc) 33 (0.08%)

Christopher Challis (Ind) 22 (0.05%)

UKIP maj 2,920 (7.29%)

Electorate 79,163; Turnout 40,065 (50.61%, -14.32%)

By-elections traditionally have low turnouts of around 30-35%, increasing that to 50.61% is a big improvement but not at the level many were expecting. In a general election that usually increases to around 60-70% which means that the UKIP majority is not big enough for them to be certain that they will hold the seat. Rochester and Strood was not a seat that UKIP had identified as a target for the general election but the swing to them (42%) is still very impressive.

I have not been able to find any research that analyses this result which shows the effect of this swing to UKIP. That is probably because UKIP was not represented in many seats at the last general election in 2010 and there is not a direct comparison. However, it would be fair to say that this swing could change the political scene substantially causing much concern among the major parties. It does look as though UKIP could achieve their target of around 15-20 seats in the next parliament making a real impact on any coalition government.

Unfortunately, the forthcoming election creates doubt for some who are the main drivers of the economy. If you are a chief executive and/or an owner of a company, this shake up of the political scene will cause concern for the future of your business. I suggest that not being able to predict what the policies of the next government will be must make anyone in that position cautious about making any major decisions in the next six months and someway beyond. I believe this will have an effect on investment plans and employment until the political direction for the country becomes much clearer after the election.

If it is a Labour controlled coalition, many businessmen will want to be satisfied that the new employment laws they have been talking about do not inflict substantial extra costs on their companies. If it is a Conservative and UKIP coalition, the chances of the UK leaving the EU will increase which could also increase costs for those that export to Europe. Either way the likely effect of this political change could have a negative impact on business expansion in the UK.

Uncertainty has the effect of people not making decisions until the future direction is much clearer and while that is going on the economy is not likely to expand and will probably show a decrease in growth for next year as is being predicted by many commentators. Although many people see this new political era as exiting, the engine of the economy will not be firing on all cylinders. The business community is not very good at making its point in the political arena, at least in public and therefore many of the relevant business reasons for following a particular course will not be heard by the electorate.

The unpopularity of politicians could produce election results that make it impossible to form a government and another election will be called to resolve that problem. That would mean the economy could suffer badly unless world growth comes to the rescue. At the moment that is not certain by any means as David Cameron has warned in his recent statements. Consequently, my point is that we are not looking at a period of strong growth over the next year until the political direction becomes certain which is just what we do not want at this particular time.

The debate that will take place prior to the next general election will be very stimulating and probably involve many more people who usually take little interest politics. That should encourage more people to take part than the normal 60-70% in previous general elections. We may well see the level of the Scottish referendum at 80% which would make the result truly representative of real wishes of the country. It is that possibility which could encourage more candidates to stand for election making the outcome even more unpredictable.

That’s all for this week, more observations next week.