Low productivity: don’t blame the workforce

Allister Heath reckons economists are complaining too much about Britain’s dismal productivity:

Too few economists seem prepared to accept that at least some of the UK’s productivity shortfall was a good thing. It happened because a large number of low productivity workers found work in the UK, dragging down the average. Similar workers have not been able to get jobs in other countries.

Productivity in countries like France, he says, is only higher because they have kept all their low productivity people from getting jobs:

To see why this matters, consider the following thought experiment: imagine two countries with identical economic characteristics and where the bottom 10pc of workers contribute 5pc of output. In the first country, a new law is passed banning them from working. They all lose their jobs, GDP drops by 5pc – but productivity shoots up by 5.5pc. Now imagine that all these workers move to the second country and immediately find work. That economy’s GDP goes up by 5pc, but because the number of workers rises even faster, average productivity falls by 4.5pc.

What country would you prefer to live in? The one being cheered by economists for its buoyant productivity and high-wage model, or the one with booming employment, where migrants, the young and labour market outsiders all find work?

So the UK, with its welfare reforms and flexible labour market, has encouraged the shirkers and the poorly skilled to get back into work. The downside is that productivity falls because a lot of these ‘labour market outsiders’ are not very good.

It sounds very plausible and it’s an argument that seems to have a lot of traction. I’ve seen a couple of TV discussions recently in which the productivity puzzle was framed as a problem of poor quality workers.

But, while it may sound plausible, it’s wrong.

Firstly, almost all the job growth since the point where productivity growth stalled has been in high skilled occupations.

Emp By Occ Feb 2015

Source: ONS Employment Stats, February 2015

Now it might be that some of this is due to people bigging themselves up in the Labour Force Survey but the numbers are so big that, even allowing for such an error, the pattern is clear. People in high skilled occupations make up a greater proportion of the workforce now than they did before the recession.

Over the same period, not only did the percentage of employees in high skilled roles increase, so did the proportion of workers with tertiary education.

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Source: Growth Through People, UKCES, February 2015

Compared with many other EU countries, a high proportion of the UK’s workforce is both highly qualified and in high skill occupations.

A recent paper by Peter Goodridge, Jonathan Haskel and Gavin Wallis concluded that the make up of the labour force could not have been the cause of low productivity.

[I]ncreased growth in labour composition is driven by (a) an increased employment share for the high-skilled, and (b) strong falls in hours worked of the low- skilled.

[T]he inclusion of labour quality (composition) deepens the productivity puzzle….. [I]t is not the case in the recession that, for example, there was a move to low skilled workers, either in terms of quantity or price, that lowered the composition of labour and so slowed productivity growth. Rather, the opposite occurred.

The ONS agrees (my emphasis):

Labour composition has made positive contributions to output growth in every year since 2000, but notably since 2008.

As noted in Franklin and Murphy (2014), the positive contributions since 2008 have exacerbated the ‘productivity puzzle’ as it implies labour input to production has been even stronger than implied by a non-weighted measure of hours worked. Alternatively, it also implies that the average productive potential of each hour worked has improved over this period, reflecting – on average- a shift towards labour market attributes that are associated with higher productivity such as educational attainment and experience.

The composition of the workforce has increased productivity but other factors, the unknowns of Multi Factor Productivity (MFP), have more than contracted its effect. But for the improved skills, experience and qualifications of the workforce, the fall in productivity would have been even worse.

Decomposition of annual output growth, 2000-2013
Whole economy

productivity growtgSource: ONS Multi Factor Productivity Estimates, January 2015

In short, then, productivity has fallen in spite of the quality of the labour force not because of it.

It may be that some new jobs have been created for the poorly skilled and that some long-term unemployed have been nudged back into work. This can’t be the reason for the fall in productivity, though, because such workers make up a smaller proportion of the labour force than they did before the recession.

Low productivity, and therefore low wages, can’t be explained as the price we pay for getting labour market outsiders back to work. The skills, qualifications and capabilities of our workforce are as good as they have ever been, if not better. Since 2007, we have seen a high skill, low productivity, low pay employment recovery. Whatever else is responsible for the UK’s fall in productivity, it’s not the quality of our workers.

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Startups and the productivity puzzle

The productivity puzzle continues to puzzle. It seems to be too puzzling for our politicians to talk about but lots of other people are on the case. Duncan Weldon wrote a piece earlier this week looking at both the economic and social factors.

This comment set me thinking:

It could be that the nature of Britain’s recovery explains the low productivity growth. Rather than lower productivity leading to lower real wages (as companies cannot afford to increase pay), it may be that lower real wages have encouraged firms to hire workers rather than investing in new equipment. This could have lowered productivity.

Where are Britain’s startups in all this? Entrepreneurs are supposed to come into the market and disrupt it, investing, innovating and bringing in new ideas which eventually improve productivity. At least, that’s the theory.

But there is little evidence that new firms are doing much to improve productivity. If anything, they are making things worse. As this NESTA research by Albert Bravo–Biosca and Stian Westlake found:

Most start-ups were not particularly special from an economic point of view. The average new British business was no more productive than the average existing business, either at its foundation or after five years of existence. While some new firms contributed positively to labour productivity growth during this period, this was offset by the negative contribution of other new firms.

So, while some new firms might have been highly productive, their contribution was more than cancelled out by those that weren’t. The net effect of new firms coming into the market was to reduce productivity.

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A recent Bank of England paper on firm level productivity found something similar and suggests that the trend has continued through the recession. For most years over the past decade, the overall contribution of new firms to productivity has been negative.

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Back to Duncan’s comment then. If existing firms are hiring cheaper workers rather than investing in technology, might a similar process of labour substitution be going on among startups? Perhaps new firms are coming into the market not because they have developed new products or services but simply because they have found a way to make a profit by exploiting cheap labour.

Mike Haynes gave an example of this a couple of weeks ago when he discussed the rise of the hand car wash.

A hand car wash is labour intensive and forgoes technology that has been developed to replace it. Normally technology is used to increase the efficiency of output and make an economy more productive – economists call this capital deepening and it’s traditionally a marker of good economic growth.

As the economies of wealthier nations evolved, the machine car wash was one of many technical changes that accompanied capital deepening. Major garages and petrol stations are equipped with expensive machines that now stand idle, while people queue for the hand car wash. This, despite the machines being good at what they do. They are unlikely to scratch your car. They wash it cleaner, use less water and the detergents are more safely taken away. Some countries even ban hand car washing because of the waste and pollution involved.

The return to an inefficient, labour-intensive model – as with the hand car wash – is therefore an odd regression. It is only possible in a rich economy like the UK’s because labour is relatively cheap – and those working in hand car washes tend to be paid at the minimum wage or below it. They experience long periods of under-employment as they wait for customers and few have proper contracts or conditions. People working these kinds of jobs, in part, explains the UK’s productivity problem.

In other words, it’s easier to make money by using cheap labour than by investing in machinery. Furthermore, in this example, people would be mad to invest in new machinery because they would be unlikely to make enough to cover their investment. The media love to talk about high-tech entrepreneurship. There may be a few such firms but most of Britain’s startups are low tech or no tech.

Has this county become an El Dorado for cheap labour? Does the business opportunity now lie in setting up a business to exploit what the Economist described as Britain’s pitiful pay and its even more impoverished freelancers? That might explain why, far from improving the country’s productivity, Britain’s startups are making it worse.

 

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David Nicholson is right: The NHS will need more money

Former NHS chief executive, David Nicholson, warned last week that the financial problems in the NHS would become “crystal clear” before the year is out. He also said that the plan to make £22 billion in efficiency savings during the next parliament is “a big ask” and, given the NHS’s history, unlikely to be achieved. He’s almost certainly right and he should know. As he told John Humphrys, he tried to do something similar.

David Nicholson has become something of a hate figure on all sides, so much of what he said last week was drowned out by political noise. It’s worth listening to the interview though because he makes some valid points, one of which is that the problems the NHS is facing are similar to those in the health services of other advanced economies:

The good news is that the situation is the same everywhere. The difficulty is that no-one has found a solution to it.

The IMF said more or less the same thing earlier this month. In its Fiscal Monitor report, a twice yearly assessment of governments’ fiscal risks, it forecast that health spending in the developed world will continue to rise:

Few economies have undertaken fundamental reforms to improve the efficiency of health spending…. such spending will still rise significantly over the longer term.

The IMF predicts that heath spending will outstrip economic growth in almost all advanced countries over the next fifteen years. Compared to some other countries, and given that the proportion of its health spending funded by the state is one of the nighest in the world, the projection for the UK doesn’t look too bad. An extra 2.4 percent of GDP is not as much as the IMF was predicting a few years ago and well below the G20 and G7 averages.

Health spending increase 2030

Source: IMF Fiscal Monitor, April 2015

That said, it still leaves us spending a greater proportion of our national income on health than we do now. We may not have quite as big a problem as some other countries but our health service will still need a lot more money over the next fifteen years. Either that or it will have to stop doing a lot of things it currently does for free.

The £8 billion extra being promised by politicians will not be enough to stop the NHS from running out of money. The upward pressure on health spending is just too great. It is extremely unlikely that productivity improvements can outrun the rising costs of healthcare. The man who once tried to do it told us so last week. Whatever else you think of David Nicholson, he’s right about this one.

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Flip Chart Cat

Our ancient cat died this week at the grand old age of 22 and 2 months. Apparently, that’s equivalent to a human being reaching 104.

Born in Brixton on 7 February 1993, she was one of a litter of five. My wife and I adopted two of them. The ginger tom we named Nelson, after the red-haired bassist in New Model Army. The long-haired female tabby we named Joolz after the poet Joolz Denby. That tells you something about the sort of music we were listening to at the time. Nelson turned into a right bruiser, weighing about 15lb, but he died in 2001. His sister, though, went on and on.

Joolz was extrovert, loud, quick and a bit mad. She yowled at high volume to anyone going past and often went into other people’s houses to kip on their sofas or scrounge food. People would say ‘Is that your cat – the loud tabby one?’ – well it helped us get to know some of the neighbours. In her prime, Joolz was a rat murderer, regularly delivering one, two and occasionally three corpses to the back door in the morning.

Sue, my second wife happily adopted the cat when she married me and indulged her much more than I ever did, at which point the hunting rate began to fall. At the weekend, Joolz would have first breakfast, second breakfast, elevenses, lunch, afternoon tea, dinner and a little light supper. Proper fish and bits of whatever we were having supplemented the usual diet. Who needs to hunt when you have all that? We moved to our current house in 2002 and shortly after that, Joolz retired. After she was about ten, the kill rate went down and I’m pretty sure she didn’t catch anything at all after 2009.

When our house flooded in 2011, the water company paid for us to live in a house a few streets away while ours was being repaired. By this time, Joolz was 18 and we were sure the move to a strange house would do for her. It didn’t. 9 months later we moved back. The cat just went straight back to her old places and routines as though we’d never been away.

It was during our exile that I decided to set up a Twitter account for the cat. A few people I knew had set up cat accounts so thought I’d do the same and see what happened. One weekend, I took a quick photo and set her up using my phone while waiting for some friends to come round for lunch. So Joolz became @FlipChartCat, tweeting general stuff about cats plus my interpretations of her moods and reactions to things. These were mostly about the weather, the quality and amount of food and the appalling lack of service. To my surprise, she ended up with 270 followers. When I held my blog celebration in March, a couple of people told me they didn’t really follow my blog and they were mostly fans of the cat. Such is the fame of @FlipChartCat, I felt I ought to announce her demise on here. I delayed it by a few days because Friday is, traditionally, Cat Blogging Day.

Apart from a bit of liver trouble, Joolz was healthy almost to the end. The vet warned me a month ago that, at her great age, the next thing she got would kill her and so it proved. Over the weekend she grew very weak until by Monday she was unable to walk. She’d come back from the brink so many times that I hoped she might do so again but it wasn’t to be. The last of the 9 lives had been used up.

I’ve never kept an animal for anywhere near 22 years before. The cat was like a last link to a different life. I was still in my twenties when I got her, married to someone else, living in a different part of London and doing different things. I would never have thought, in 1993, that the cat would outlive my first wife, my father and two fathers-in-law but she did. When she died, 22 years of my life flashed before me.

It will be strange without her and we will miss her terribly. But after 22 years, we can’t really complain. She would, no doubt, but then, that was what she did.

Her view of the world was that if you couldn’t eat it, couldn’t sleep on it, it didn’t keep you warm or didn’t give you love, it wasn’t really of much interest. It’s difficult to argue with that.

The last word goes to my friend Jez, who introduced me to the people who gave Joolz to us all those years ago. Drinking a toast to this most venerable of cats, he said, “Here’s to an idle life well lived.”

Goodbye my old cat. It was a privilege to know you.

Joolz, aka @FlipChartCat

Born: Brixton, 7 February 1993. Died: Hanwell, 13 April 2015.

proxy

‘This Twitter thing’s a breeze….’

Update: Thank you for all the sympathy, empathy, good wishes and cat anecdotes you’ve sent to me here, on Twitter, by text and by email. There are a couple of really good pieces about looking after older cats and deciding when it’s the end on the Messybeast site. They are written with sensitivity but in a very matter of fact way. Recommended reading if you have a superannuated pet.

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Buccaneering Britain

“The absence of productivity growth in the seven years since 2007 is unprecedented in the post-war period,” said the ONS after its figures showed yet another fall in productivity.

Whichever way you measure it, it’s rubbish.

Screen Shot 2015-04-15 at 15.51.48

It’s not only rubbish when compared to past performance, it’s pretty bad when compared to most of the other G7 economies. We closed the gap during the 1990s and 2000s only to see it open up again after the recession.

Screen Shot 2015-04-15 at 15.57.14

Chart via IFS

LSE’s Centre for Economic Performance published a pre-election briefing on productivity a couple of weeks ago. Among its conclusions:

UK GDP per hour is currently around 17% below the G7 average. This is due to low investment especially in infrastructure and innovation, poor management and weak intermediate skills.

This chart, taken from the CEP report, shows that, while R&D investment has risen in Germany, France and the US, it has been falling steadily in the UK over the past couple of decades.

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Relative to the size of its economy,the UK’s R&D spending is now well below the EU average.

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Chart via ONS

We British like to think of ourselves as a creative nation but according to Eurostat’s innovation index, which measures innovation in a number of areas, the UK is now a follower not a leader.

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Not only that but its performance has lagged behind when compared to others in the follower group.

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Growth performance of Ireland (1.0%), Belgium (0.9%) and the UK (0.5%) is well below that of the EU and their relative performance has worsened over time.

In other words, mid-table in the second division, in danger of sliding towards the relegation zone.

Does this mean that our scientists are unproductive too? Far from it. A BIS report in 2013 found that the UK research performs extremely well when compared with other countries.

While the UK represents 0.9% of global population, 3.2% of R&D expenditure, and 4.1% of researchers, it accounts for 9.5% of downloads, 11.6% of citations and 15.9% of the world’s most highly-cited articles (see Figure 1.1A).

In other words, despite being a small country that doesn’t spend much on R&D, the UK produces world-class research. As the report says:

The UK is a highly productive research nation.

The trouble is, not much of it finds its way into the development of things which might boost the rest of the country’s productivity. As Helen Miller of the IFS remarked:

There is also a weakness in the extent to which science is commercialised and translated into new products and services.

As Ethan Mollick said, innovation requires both innovators and suits. Good managers are crucial to innovative and knowledge intensive industries. Without a supporting business infrastructure, there is nowhere for good ideas to go.

Of course, R&D and innovation aren’t the only factor affecting productivity growth but when you look at it alongside the fall in training provision and general business investment you start to see a pattern.

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Organisations have been doing less of the sort of things that improve productivity and this has been going on for some time.

Coincidence? Not according to Andrew Smithers. This is exactly what senior business executives have been rewarded for doing, he says:

A major cause of the decline in investment in recent years that has fed through more recently to falling productivity has been the change in the way senior executives are paid. The massive jump in their remuneration is largely due to the rise in incentive payments that are linked to short-term changes in profits and share prices. As such, management now has a much greater incentive than before to run companies in ways that will enhance these measures in the short term, even though the price is lower long-term investment.

Crucially, underinvestment enables companies to gain market share in the short term, as their consequent lower costs allow them to reduce their prices while maintaining the same margins and thus undercut their competitors.

In other words, if it’s bonuses based on the short-term share price you’re after, it actually pays to cut investment. If that screws the organisation in the long run, who cares, you’ll be long gone.

Because companies usually have long life spans, we might expect them to take a more considered approach. However, chief executives can rationally expect only to be in office for a few years. The change in incentives has therefore shifted the balance of decisions away from the longer-term interests of companies to the shorter-term interests of management. The result has been a sharp decline in investment, an increased drive for higher margins and a preference for adding labour rather than capital equipment in response to rising demand. These preferences naturally results in weak labour productivity.

Falling investment and its consequence, low productivity, suggests that management in the UK has become more short-termist. Given what we know about pay and reward, it’s likely that remuneration played at least some part in that. So far, there are few signs of any significant change.

Earlier this week, David Cameron described Britain as a buccaneering country. Buccaneers attacked when they saw rich pickings, grabbed as much as they could and then made a quick getaway. Maybe he’s right.

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NHS: The elephant in the public spending room

Yesterday’s FT headline announced that the NHS has a bigger hole in its finances than we thought because it hasn’t made the efficiency savings the politicians were banking on.

The National Health Service is facing an even bigger financial “black hole” than politicians and health leaders have acknowledged, following a sharp fall in productivity revealed in an analysis of official data for the Financial Times.
The research, carried out by the Health Foundation, an independent think-tank, shows that despite an inflation-protected budget, hospital productivity tumbled from 2012 as the NHS prepared for, then implemented, a contentious structural shake-up that stripped out layers of management and handed budget control to clinicians.

The Health Foundation report shows that, after an initial increase in hospital productivity in the early years of the Coalition, it then fell again in subsequent years.

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This is more or less in line with what the ONS figures showed for the wider NHS earlier this year. (See previous post.)

A report from the King’s Fund last month showed that the Coalition made more cuts to NHS budgets than it initially planned in its early years, only to increase spending again towards the end of its period in office.

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Those early years saw NHS productivity increase at a faster rate than anything seen in the last couple of decades.

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This isn’t really surprising. In an organisation that has had regular budget increases for years, it is relatively easy to spot some quick efficiency savings. The NHS, whose workers thrive on dealing with emergencies, proved to be good at finding emergency cost savings.

The difficult part of any attempt to improve productivity is sustaining the momentum in the second and third year, once the quick wins have all been spotted. In many organisations, public and private, the energy and enthusiasm starts to run out.

At the same time, the health service had to deal with a reorganisation which was massive even by previous NHS standards. It will be some time before the full cost of the Lansley reforms is assessed but restructures always divert attention away from the day-to-day. When jobs are under threat and new ones are up for grabs, people focus on positioning themselves and securing their future. That’s the same in any organisation. An earlier King’s Fund report remarked that the first part of the last parliament was taken up with understanding and implementing the reforms while the second part was taken up with limiting their damage.

As if that wasn’t enough, the NHS found itself facing rising staff costs. Was that because it breached its pay freeze? No such luck, might be the response of some NHS staff. In fact, although permanent staffing levels increased slightly, the amount spent on permanent staff fell in the year to March 2014. The rise in costs is accounted for by the extra £1 billion spent on temporary staff.

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The Health Foundation comments:

[I]t is clear that the service is under significant strain and the finances of NHS hospitals have deteriorated very rapidly.

The reasons for this are very clear from our analysis. Hospital operating costs have been growing at a faster rate than their income. The key driver of rising operating costs is staff costs and, in particular, the rapid rise in spending on temporary staff. One outcome of Sir Robert Francis’s report on the scandal of poor care standards at Mid Staffordshire has been a sharp rise in the number of nurses employed in hospitals. This has increased the unit cost of providing an episode of care.

Few would argue that having more nurses is not a Good Thing but it comes at a price.

If anyone is in any doubt about the importance of all this, take a quick look at the OBR’s long-term spending projections. I said last week that the deficit was a productivity thing and nowhere is that more true than in the health service.

According to the OBR’s forecasts, an NHS productivity increase of 2.2 percent per year would keep health spending at a constant proportion of GDP for the near future. Anything less would see health costs increase faster than the economy grows, meaning that health spending would take up an ever larger slice of our national income and our tax revenues.

Michael O’Connor has helpfully put the OBR’s low NHS productivity scenario, an annual 1 percent increase, on a chart with some of the other variables it considers.

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Low heath care productivity growth will have a far greater impact on the public deficit than immigration or demographics. You wouldn’t think so from the amount of media coverage though.

As this Health Foundation projection shows, even the recent average productivity growth of 1.5 percent per year would see health spending needing to rise at 2.9 percent per year, so more than forecast GDP growth, or else a big funding gap opening up by the end of the next decade.

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It is, though, very unlikely that the NHS can sustain annual productivity increases of 2.2 percent over a long period. It has never come anywhere near that in the past. The Health Foundation concludes:

Our analysis of the efficiency and productivity performance of the NHS over recent years suggests that this will be a very substantial challenge.

[W]hile it is relatively easy to identify the opportunity, our analysis confirms that the NHS – like most health care systems – has struggled to make progress on tackling variation
in productivity.

If NHS productivity matched the estimate of the whole-economy trend rate of productivity growth (2.2% a year), public spending on health as a share of GDP could remain broadly constant and meet projected pressures. However, there is no evidence that productivity at this rate could be sustained in the medium term.

Long-term productivity improvements of more than 2.2 percent across entire service sectors are rare (see Table B of this Bank of England report). KPMG reckoned that private service sector productivity in the UK only increased by 2 percent per year in the decade before the recession.

Annual productivity increases are a big ask. We are not talking about 2.2 percent next year or even for the next five. To stop health spending outstripping GDP would require productivity increases at that level every year for the next fifteen and probably beyond. The occasional heroic 3.5 percent wouldn’t do it if it then fell back to below 1 percent the next year.

Next to pensions, the NHS is the largest proportion of public spending and the biggest chunk of public service spending by a long way. What happens in the NHS is therefore far more significant for the public finances than immigration, unemployment benefits or any of the other subjects that get a lot more air time.

Based on past performance and the pressures facing the NHS, it’s difficult to see it making productivity improvements of more than 1.5 percent per year over the next decade or so, which means it will either take up an ever greater share of tax revenues or it will have to stop doing so much for free.

At the moment, though, politicians are keeping quiet about this. They make glib statements about productivity improvements and talk about the increasing NHS deficits as though they are a temporary problem brought on by something the other lot did. What sort of health service we want and how much we are prepared to pay for it is one of the most important decisions we need to make in the next five years. Going by the level of discussion in the election campaign, though, you wouldn’t know it.

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Don’t panic, Britain is not becoming ungovernable

The reaction to Thursday’s leadership debate was far more entertaining than the programme itself, as politicians and the commentariat struggled to come to terms with the sight of seven party leaders slugging it out on TV. Frustratingly, no-one could work out who had won so everyone claimed victory.

The trouble is, our political system has been built on the assumption that one of two major parties will get a working majority. The anxiety of the week between the 2010 election and the emergence of the Coalition showed that the UK had no idea how to do multi party politics. Judging by this week’s reaction to the TV debate and the desperate search to declare a winner, it still doesn’t. During the AV referendum, a friend of mine insisted that changing the electoral system would be stupid as there has the be a winner in every race. I tried to point out that politics isn’t actually a race. But some metaphors are so powerful and long standing that people find it hard to accept they are metaphors. If we must understand elections as races, in the next one, all the contestants will collapse wheezing before reaching the finishing line.

For some last week’s debate was a game changer for others a mess. Some commentators seemed to be in denial, so they wrote the same two party stuff that they have been writing for decades. Others warned of chaos and worse. Five years ago, Britain was ‘going bankrupt’. Now, apparently, it’s becoming ungovernable.

In fact, British politics has been changing for years it’s just that, in this election, the changes have now become too big to ignore. All that happened on Thursday night was that a lot more people noticed. 

Shortly after the 2010 election, the Institute of Public Policy Research (IPPR) published a report on the slow death of the First Past the Post (FPTP) system. In 1951, the Conservative and Labour parties between them got 97 percent of the votes cast. By the last election, their share was down to 65 percent.

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For many years, though, this didn’t matter. The features of the electoral system meant that, even as their share of the vote fell, the two main parties could still win comfortable working majorities and the occasional landslide. British governments still looked like they did in the 1950s, even though the underlying numbers were changing.

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Source: Guardian

This went on until the last election when the decline in two party support became so severe that neither could get a majority of seats. Under FPTP, a minority of voters can give a party a healthy majority, provided those voters are in the right places. But even under FPTP there comes a point when that is no longer possible. Once your vote sinks to around a third, the maths start to work against you. That is where our two main parties now find themselves stuck. The old tribal identities which delivered big majorities have weakened and the once powerful vote-harvesting party machines have withered. I’m reminded of Charles Handy’s frog that doesn’t notice the water heating up and eventually allows itself to be boiled to death.

There are a couple of interesting sub-plots to all of this. One is the halving of the number of of straight Tory-Labour marginals since the 1950s, which means that a swing away from one party is less likely to deliver seats to the other.

The second is the strange death of Conservative Scotland. In 1950, Scotland was more Tory than the rest of the UK. Nowadays, the Scottish Tory is on the verge of extinction.

Scottish-Conservatism-1950-2010

Source: Nick Pearce, IPPR

As the IPPR’s Nick Pearce explains, there are a number of reasons for this and it’s not all Margaret Thatcher’s fault. Nevertheless, it is unlikely to be reversed in the near future. It might soon be followed by the strange death of Labour Scotland, although it’s still a bit early to read the last rites.

All of which means that neither main party is likely to get a majority on 7 May and, even if one of them does, it will be wafer thin and will probably be destroyed by by-elections before the five years is up.

But talk of Britain becoming ungovernable is pure hyperbole. Lots of countries have multi party systems and take such things in their stride. As anyone who has watched Borgen or The Killing will know, coalitions are just part of everyday politics in some parts of the world.

The UK is a stable, well governed society with a high level of political legitimacy and a general acceptance of the rule of law. That’s the main reason why it has some of the lowest borrowing costs in the world. Other countries have cultural, regional, religious and linguistic divisions which are far more bitter than anything we have, yet they manage them within their political system. Just because the British seem no longer inclined to elect a majority government, even under a system that rigs the contest in favour of such an outcome, it doesn’t mean that the country is falling apart. Most other countries in Europe have had coalitions for decades. If Britain is becoming ungovernable then so are Sweden and Switzerland.

We need to evolve new systems and processes to manage what looks like it will become a regular feature. We’ve had hung councils for some years now. We’ll have to learn to live with hung parliaments too. The fragmentation of party politics won’t make Britain ungovernable. Politicians will just have to find different ways of governing.

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