Immediate help for the economy

We await Labour's plans to help out companies and stimulate the economy.

The Conservative plans are very poorly thought out - deferring VAT payments simply means that companies will get into more trouble whenever they have to make the extra payments - pay double VAT next year ? This could be catastrophic. This is because VAT liabilities continue for even unprofitable businesses. This also does nothing to stimulate spending or encourage employment.

Here are 2 ideas - one virtually cost free and one tax cut alternative to Income tax or VAT cuts. Both would have an immediate impact:

1. Allow an extended period for payment of corporation tax. The current round of CT payments are being made by companies based on a financial year that finished 6 months or more ago. A number of companies are therefore being hit by having to pay CT on previous strong profits out of a current P & L that is flat or even in the red. Many companies are expecting to make no profits in the current financial year and will therefore not be liable to CT on current trading - but they will not get the benefit of this in terms of cashflow until this time next year. For many smaller (or even larger) companies this places them in a difficult financing situation unless they have very good cash reserves (most don't - many successful and growing companies reinvest profits into growth rather than piling up dead cash). Companies should be able to declare to the HMRC if they are trading flat or making losses now and request that the CT payments for last year and current year be taken together and paid over the whole 2 year term (Rather than paying a massive bill now and no bill at all next year). The only cost to the taxpayer is the interest on the second year payments. (At current and likely future interest rates not much).

2. A more expensive option would be to cut both employer's and employee's NI. Employer's NI has always been strange - a tax on employment. Income tax cuts alone will put more cash into employee's pockets but the benefit will only be felt gradually and only if people spend rather than save. It will not help employers in the short term - in fact because companies withhold Income Tax and pay it to HMRC a month later this would actually be negative to employers in the immediate term as they will be paying more in month one and less in month two.

VAT cuts don't help VAT registered businesses. They help personal consumers with a gradual impact on retailers. A cut in both forms of NI will have an immediate beneficial impact on both employees and employers - and as NI is paid disproportionately highly by the lower paid this helps as they are more likely to spend the extra cash.

Another Liberal Party ?

As if the poor 'Liberal' voter isn't confused enough by the 'continuing' Liberal Party, a Party that defines itself on not being another Political Party (i.e. The Liberal Democrats), there is now a Social Liberalist Party - should we be afraid ? - probably not as it seems to be half a dozen schoolboys from Croydon.

Finally maybe they will pay out on the Republican nominee

I bet on both McCain and Huckabee at 6.6 to 1 and 6 to 1 respectively back in 2007 so knew a long time ago I would be up on this one but Ron Paul's defiant stand and the nature of the US presidential nomination system mean that I have had to wait until now for a payout. As I post it is still an 'Open' market. I'm obviously hoping for an Obama presidency but I am relieved that whatever happens it cannot be as bad as Bush.

Westminster Lib Dem Drinks

Westminster Lib Dems meet for drinks and political chat every other month at St.Stephen's Tavern, Bridge Street, SW1 from 7pm. The next one is coming up on Wednesday 6th August. If you are a Lib Dem and fancy joining us for some topical chat over a cool drink please join us. Full details on Flock Together.

How Pollsters vary in recording Lib Dem support

The major UK pollsters consistently record a variance in support for the Liberal Democrats. There are two possible reasons for this - what question is asked and what weighting is made on the results. Some pollsters offer a party list, some rotate the order, some add in 'Don't know' all offer others. It is well established that the Lib Dem vote usually rises in the last few days of an election campaign as the Party gains the pledges of a higher proportion of 'floating' voters than it does of hard core "I always vote X and always will" voters. It is not surprising then that the Party fairs less well when there is a 'Don't know' option. YouGov uniquely offers 'Don't know' and also offers 'won't vote'. The Lib Dems best performance is with ICM which does not give either of these options.

The actual questions asked are as follows:

IpsosMori: How would you vote if there were a General Election tomorrow? Conservative/Labour/Liberal Democrat/Other

ICM: If there were to be a general election tomorrow which party do you think you would vote for? Conservative/Labour/Liberal Democrat/Other
Populus: If the general election was tomorrow, which party would you vote for? Would it be [rotate order] Conservative, Labour, Liberal Democrat, or another party - or would you not vote at all?
YouGov: If there were a general election tomorrow, which party would you vote for? Conservative, Labour, Liberal Democrat, Scottish Nationalist/Plaid Cymru, some other party, would not vote, don’t know.
ComRes: If there were a general election tomorrow, would you vote Conservative, Labour, Liberal Democrat or some other party?

The second issue is what is done with the raw results - some pollsters amend numbers based on 'certainty to vote'. ICM and Populus apply a weighting based on previous regularity of voting. IpsosMori does not. This could provide a bias to Labour in Mori polls as it is well demonstrated in recent general elections that the actual Labour vote turned out to be lower than polled vote and reflects the old adage that 'A high turnout is good for Labour'. For more on this I defer to Anthony Wells post in his excellent UK Polling report to which I am indebted for much of the data on this subject.

Opinion Polls Trend July - Slight Slippage as Predicted

I predicted last month that the Liberal Democrat poll share would slip slightly over the summer and pick up again in the autumn with the conference season and the July figures bear this out. It should also be noted that 3 of the 9 polls were from Yougov, traditionally the worst for the Lib Dems, though the lowest poll actually came from IpsosMori. It can be argued that in order to compare 'apples with apples' a comparison should be made of a specific pollsters figures over time. For these figures in recent months I have provided a handy table in a separate posting.

Church Street By-Election - disaster for Labour, and lessons from the May London elections.

This by-election, which took place on Thursday 24th July was notable for two reasons - firstly it was the second attempt by ex Blur drummer Dave Rowntree to get elected to Westminster Council. Secondly the Conservatives won this ward for the first time ever.

The result was disappointing for the Lib Dems - 10% for a lot of effort but this was a ward that had no previous activity at all, only 3 members and had been the Tories' top target ward in the Borough. Both Labour and the Tories poured money and workers into this and we suffered a classic 3rd party squeeze.

The result was

Con 955 (53.6; +24.5)
Lab 652 (36.6; -3.0)
LD Martin Thompson 176 (9.9; -1.3)
[Respect (0.0; -20.3)]
Majority 303
Turnout 24.1%
Con gain from Lab
Percentage change is since May 2006

A Tory gain was always possible and the selection of a candidate of Bangladeshi origin who had been brought up on the main (Lisson Green)estate certainly helped - I suspect the large Respect vote last time switched straight over to Tory. But the scale of the victory surprised even the most hard core Tory optimist and Labour pessimist. As recently as May, in the London elections this ward had voted in the Party list ballot:

Labour 1134

Tory 534

LD 175

The ward had also voted for Ken Livingstone with 1428 vs 705 for Boris and 153 for Brian.

So what is going on - has the Labour vote collapsed further since its low in May ?

I have argued before that the Lib Dems should not get too depressed or introspective about our performance in London in May, where a record of good local By-election results and a strong performance in the local elections nationwide did not materialise in the Capital with a poor mayoral result and a reduction in number of GLA members. I believe that Ken held up the Labour vote in an exceptional way and that the Mayoral vote carried through to the GLA ballot. This was for many reasons - including residual support of independent minded and anti establishment voters and his identification as the only candidate that could stop Boris. The result was a two party (really two candidate) squeeze which does nothing to predict likely future parliamentary or local government results.

I therefore suggest that the Church Street By-election, and the local by-elections in London and elsewhere do not represent great enthusiasm for the Conservatives but rather the extremely deep unpopularity of Labour. Voters will back the candidate best placed to beat Labour in a mirror of the situation between 1992 and 1997 - Glasgow East also demonstrates this. There are opportunities here for the Lib Dems - Nick Clegg has been unfortunate with the run of By-elections - only an election in a Labour held seat where the Lib Dems are second will demonstrate the party's prospects at the next General Election.