The cost of living crisis and the general election

Good morning from New Economy Brief.

This week’s newsletter examines the politics of the cost of living by exploring new polling from Stop the Squeeze that takes an in-depth look into how voters are processing the policy debates around it, and how important the issue will be to the forthcoming general election.

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The cost of living crisis will swing the next general election. As the summer ends, political parties are gearing up for an impending general election. We may not know exactly when it will happen, but the issues it will be fought on are becoming clearer. The Bottom Line: How Bold Action on the Cost of Living is Key to the Next Election, a new report from the steering group of Stop the Squeeze (a coalition of 50 civil society organisations campaigning for structural solutions to the cost of living crisis), sheds new light on a crucial one. The report sets out to discover what voters, and especially key swing voters, are hearing from the parties, how they are responding, and the kinds of messages and policies on the cost of living crisis that might sway them in 2024.

• Policies to tackle the cost of living crisis are critical to swing voters. The cost of living crisis will be the second-biggest factor in voters' decisions at the next election, just behind the NHS. This is especially true for voters in the vital swing voter demographic which is sometimes called ‘Stevenage Woman’. Here, the cost of living, the NHS, and the economy are the only issues that gain any sort of traction - no more than 17% of people identified any  other issues as important.
• …but voters aren’t confident in either major party on the issue. While the cost of living is a priority for most voters (50%), far fewer (<25%) think the same is true of either of the main parties. For swing voters, this is even lower (<20%). Both parties need to do much more to reassure voters that they really care about the cost of living, and have a clear plan to bring it down. (This supports previous findings by The New Britain Project and More in Common on the lack of trust in politicians to solve the crisis.)
• The Conservatives are losing voters on the cost of living, but Labour could do much more to win them. Labour may be slightly ahead in being seen as the party with a better plan to tackle the crisis, but a Labour majority is certainly not in the bag. Only one in ten (11%) Conservative 2019 voters rate Labour higher on the cost of living, with more than three times as many (37%) not choosing either party. Three quarters of voters don’t have a clear idea of what Labour would do to solve the crisis, implying that Labour has yet to land the message that it has a real plan to improve people's living standards. Overall only 15% of voters have a good idea of what either party would do to address the crisis, indicating that the public have noticed the absence of proactive policies. Lots of voters are still in play, and a stronger policy offer from the Conservatives or Liberal Democrats could have a huge impact on the result. For Labour, the issue is less that the public think the party is focused on the wrong things, and more that they are not sure what its priorities are at all. 

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How to win over swing voters on the cost of living. The voter group dubbed 'Stevenage Woman’ (or ‘Disillusioned Suburbans’) by the think tank Labour Together will be particularly important in the next election. Representing 21.8% of the electorate in England and Wales, these voters are particularly well represented in the East of England, in London’s suburbs, and in the North East and West. They are young, economically insecure, worried about their finances, and unlikely to own their own homes. They are not highly politicised, but are generally socially conservative while leaning left on the economy. How this group votes will decide which party wins the next general election. As Labour Together say: “A working majority depends on Labour’s ability to convert their current support amongst Disillusioned Suburbans into votes at an election.” So how can political parties win over these crucial voters?

• The public support bolder messaging and more ambitious policies. Stevenage Woman wants to be shown practical policy solutions that will make her own personal finances more secure. The Stop the Squeeze report demonstrates that clear, concrete policies to deal with the rising cost of living, such as lowering energy bills, increasing the minimum wage and social security payments, and raising taxes on the super rich, would help Labour win over this crucial target group (policies such as the National Living Income and the National Energy Guarantee proposed by the New Economics Foundation could fit into this bracket, and there are lots of options for increasing taxes on the wealthy, as explained by Tax Justice UK). While putting policies like these on the table might be unpopular with some voters, the report argues that having a political argument around these policies could reinforce the message that Labour does have a plan on the cost of living, strengthening resolve among key voters and increasing the chances of those voters actually turning out on polling day. Conversely, if the Conservatives were to make a renewed offer on the cost of living at the election, this could chip into some soft Labour support and leave the party vulnerable.‍
• What policies do swing voters want? Voters prefer government support for energy bills, which continue to be a major source of pain for many families. Help with mortgage and rent payments also performed very strongly in the polling. Increasing the minimum wage ranks second highest for swing voters, and performs well across all demographics. It is more popular than cutting taxes on wages for everyone, except among right-leaning demographics. ‍‍
• ‍Tax cuts are a red herring. Political debates have focused heavily on the level of taxation over recent years, but there is no real evidence that the public see tax cuts as the answer to the cost of living crisis. Cutting taxes on wages came sixth out of a list of possible priorities for action, only performing strongly among core Conservative supporters. Cutting taxes on goods and services (i.e. VAT) was slightly more popular overall. Overall a party could get significantly more mileage from policies to reduce the impact of escalating energy and housing costs than from offering tax cuts. Voters also overwhelmingly think that cost of living support should be funded by taxing the richest in society, although they remain divided on the question of whether or not additional spending on this would be inflationary.

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The political opportunity for all parties. The report suggests that a party that is willing to make a bigger offer on the cost of living, focused on areas the public care about such as energy bills and housing costs, and funded by taxation of wealth, could reap the rewards with voters who are desperate for government action that could really improve their lives.

• In summary: Voters think the cost of living is one of the most important issues for the next election - if not the most important. They think neither party cares about it as much as they do. And while they lean towards Labour on the issue, they don’t have a clear idea of what either party proposes to do to address the crisis. This creates a significant opportunity for both parties. This matters both because it indicates that a Conservative comeback is still possible, but also because the lack of policy solutions on offer is highly likely to lead to voter apathy and low turnout.‍
• The road to a Labour majority? If Labour were to put forward bolder policy solutions on the cost of living, this could help them win over key swing voters like ‘Stevenage Woman’ in the run up to the next election. This supports an argument made by Alistair Campbell, who says that Labour needs to develop “a positive policy agenda that would persuade the country that Labour was a credible and compelling alternative…in order to turn possible into probable, or move the prospects of a hung Parliament into a good Labour majority”.