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The future of British government and public finance Tony Travers LSE.

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1 The future of British government and public finance Tony Travers LSE

2 There has been a long-term decline in CON+LAB voting From over 97% in the 1950s to 65% in 2010 (may recover slightly in 2015?) But there has been a differential regional decline for the Conservatives and Labour The Conservatives have declined fastest in the urban North, North West and Scotland, while Labour have been similarly affected in the rural East, South East and South West Conservatives can still win in the affluent, rural, north and similarly Labour can win in the inner-urban south It has become ever-harder for the ‘major’ parties to win a general election outright

3 General Elections: Great Britain Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

4 North (NW + NE) Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

5 Conservative decline in northern met. districts - 1 CONLABLIB/LDOTHERS Manchester 1978 465300 2010 062331 Knowsley 1978 184221 2010 053100 Liverpool 1978 2440350 2010 048375 Gateshead 1978 145652 2010 045201 Sources: (1) Local Elections in Britain: A Statistical Digest, C Rallings & M Thrasher; (2) BBC

6 Conservative decline in northern met. districts - 2 CONLABLIB/LDOTHERS Newcastle 1978 334032 2010 034422 Sheffield 1978 246060 2010 039423 Sources: (1) Local Elections in Britain: A Statistical Digest, C Rallings & M Thrasher; (2) BBC

7 The Midlands, 2005 and 2010 ConservativesLabourLiberal Democrats GBEMWMGBEMWMGBEMWM 200533.237.135.036.139.038.722.618.518.6 201036.941.239.529.729.830.623.620.820.5

8 South East + East: GSE excl London Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

9 South West Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

10 London Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

11 Scotland Source: Derived from statistics in (1) British Electoral Facts 1832-1999, by C. Rallings & M. Thrasher; (2) House of Commons Library

12 A problem for the Conservatives and Labour…. There are significant areas of the country where the major, traditional, parties’ vote share has declined precipitously, though the Midlands remain more ‘traditional’ Unless the major parties can re-establish themselves in these places and with lost voters (in all areas) they are less and less likely to win an election outright and could, potentially, be overhauled by an insurgent party Where will Liberal Democrat votes go if the party’s share declines permanently to below its pre-2010 level? Can UKIP win (1) protest; (2) former Conservative and (3) ‘working class’ Labour votes? Can the SNP damage Labour in Scotland and thus nationally? Key challenge: how can the Conservatives and Labour re-connect with these people and in places where decline has occurred?

13 Taxation and public expenditure as % of GDP Source: Office for Budget Responsibility, Economic and fiscal outlook Charts and Tables, March 2014, Chart 1.1

14 Local government current expenditure 2009-10 to 2013-14 2009-102010-112011-122012-132013-14% change cashreal Highways & transport65415669538048234775-27.0-32.3 Social care2096321062211602113621526+2.7-4.8 - Children’s63966654642366126952+8.7+0.7 - Adults14567144081473814524145740-7.3 Housing27152482210319972017-25.7-31.2 Culture, env’t, planning1108310675974194079193-17.1-23.1 - Cultural34653278302129402836-18.2-24.2 - Environment53085201506850364986-6.1-12.9 - Planning23102197165214301371-40.6-45.0 Police1202211948116501133710920-9.2-15.8 Fire & rescue21772165211821192099-3.6-10.7 Central services37713608334434123281-13.0-19.4 Total - cash5927257609554965423153811-9.2 Total - real5927256144528765090449375 -15.9 Sources: (i) DCLG Local authority revenue expenditure and financing statistics, 2009-10 to 2013-14 (ii) GDP deflator: Public Expenditure Statistical Analyses 2014, Table F2 Note: omits education, public health and other services where year-to-year comparability is impossible

15 Current expenditure - Central and local government LOCAL [England] 2009-102010-112011-122012-132013-14% change cashreal Social care2096321062211602113621526+2.7-4.8 Fire & rescue21772165211821192099-3.6-10.7 Police1202211948116501133710920-9.2-15.8 Central services37713608334434123281-13.0-19.4 Culture, env’t, planning1108310675974194079193-17.1-23.1 Housing27152482210319972017-25.7-31.2 Highways & transport65415669538048234775-27.0-32.3 LG total - cash5927257609554965423153811-9.2 LG total - real5927256144528765090449375 -15.9 CENTRAL 2009-102010-112011-122012-132013-14% change cashreal Debt interest3049745165483754754947384+55.4+44.0 International development52345909616761058074+54.3+43.0 Health (UK)110737114437116987119491125551+13.4+5.1 Social security221948229380239401250046251481+13.3+5.0 Education (UK)7855082351791088035883468+6.3-1.5 Defence3365234982350563289933167+1.4-8.7 CG total – cash (UK/Eng)448750475986490874506384515204+14.8 CG total – real (UK/Eng)448750463873467783477384477491 +6.4 Sources: (i) Public Expenditure Statistical Analyses, 2014, Tables 1.1; 5.4 and 6.2; (ii) DCLG Local authority revenue expenditure and financing statistics, 2009-10 to 2013-14; (iii) GDP deflator: Public Expenditure Statistical Analyses 2014, Table F2

16 The future of ‘unprotected’ expenditure

17 Local government current expenditure 2013-14 to 2018-19 (projected) England 2013-142018-19% change cashreal Highways & transport47753110-35.0-40.4 Social care2152621885+1.7-6.9 - Children’s 69527571+8.90 - Adults 1457414313-1.8-8.4 Housing20171346-33.3-38.9 Culture, env’t, planning91937105-22.7-29.2 - Cultural 28362083-26.6-32.7 - Environment 49864383-12.1-19.5 - Planning 1371642-53.2-57.1 Police109209502-13.0-20.3 Fire & rescue20991971-6.1-14.0 Central services32812700-17.7-24.6 Total - cash5381147623-11.5 Total - real5381143610 -19.0 Sources: (i)2013-14 expenditure figures taken from DCLG Local authority revenue expenditure and financing statistics, 2009-10 to 2013-14; (ii) 2018-19 expenditure figures estimated by applying annual average cash percentage changes for each service from 2009-10 to 2013-14 to the period 2013-14 to 2018-19. Note: service-by-service figures scaled to fit total;, (iii) GDP deflator: OBR, Economic and Fiscal Outlook charts and tables – March 2014, table accompanying Chart 3.27;

18 Local government current expenditure 2009-10 to 2018-19 (cumulative, projected) England 2009-102018-19% change cashreal Highways & transport65413110-52.5 -59.7 Social care2096321885+4.3 -11.4 - Children’s 63967571+18.4 +0.5 - Adults 1456714313-1.7 -16.6 Housing27151346-50.4-57.9 Culture, env’t, planning110837105-35.9 -45.6 - Cultural 34652083-42.8 -49.0 - Environment 53084383-17.4 -29.9 - Planning 2310642-72.2 -76.6 Police120229502-21.0-32.9 Fire & rescue21771971-9.5 -23.2 Central services37712700-28.4 -39.2 Total - cash5927247623-19.7 Total - real5927240418-31.8 Sources: (i)2013-14 expenditure figures taken from DCLG Local authority revenue expenditure and financing statistics 2009-10; (ii) 2018-19 expenditure figures estimated by applying annual average cash percentage changes for each service from 2009-10 to 2013-14 to the period 2013-14 to 2018-19. Note: service-by-service figures scaled to fit total;, (iii) GDP deflator: (i) Public Expenditure Statistical Analyses 2014, Table F2 and OBR, Economic and Fiscal Outlook charts and tables – March 2014, table accompanying Chart 3.27;

19 Local government to be a major contributor to the shrinkage of the State UK State is about to shrink to 36% of GDP Local government, Defence, civil service, BIS, etc to take most of the pressure Councils will survive but be very different….

20 The future of British government and public finance Tony Travers LSE


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