Daily Archives: 17 September 2008

The Littlewood Effect: Why wishful thinking won’t win the argument for tax cuts for the rich

The new ginger group Liberal Vision – which to all intents and purposes appear to be an entryist brand of the libertarian pressure group Progressive Vision – published a pamphlet this week called ‘The Cameron Effect’ (pdf). As regular readers of Guido Fawkes will know by now, this report makes the startling claim that two in three Lib Dem MPs ‘could’ lose their seats at the next election unless the party introduces a policy of cutting tax cuts, including cuts aimed at high-earners.

Rumour has it that the reaction of at least one MP to this report was to push its co-author Mark Littlewood into a hedge. While I don’t condone violence, I have to admit I can empathise (sp. I can’t believe I wrote emphasise last night!). But for me, the real problem with this pamphlet is not that it is unwelcome (publish and be damned) but that it is a spectacularly poor piece of research.

Let’s take the psephology for starters. Littlewood and his co-author David Preston have this pearl of wisdom about first past the post:

“Under Britain’s byzantine electoral system – it is not just absolute vote share that matters but relative vote share.”

Hmmm… not sure about that. I notice there are no footnotes. Relative vote share certainly does matter in d’Hondt elections, but where is the evidence that is the case for FPTP?

Problematically for Littlewood and Preston, the example they cite doesn’t support their argument. It IS true that if you look at the average ratio of Liberal:Conservative votes in the 1983, 1987 and 1992 elections and compare it to the average ratio of LD:Conservative votes in the 1997, 2001 and 2005 elections, the ratio does indeed change from roughly 1:2 to 2:3. But if you compare 1992 to 1997, during which period the number of Lib Dem MPs leapt from 20 to 46, the ratio goes from a bit under 1:2 to a bit over 1:2. The 2:3 ratio cited only emerges once you factor in the 2005 General Election, when we made significantly fewer gains. If this analysis were correct, surely the ratio would be higher in the year of our great breakthrough?

But of course the difference between 1992 and 1997 was not some quasi-mystical change in relative vote share but a dramatic shift in the way the party targeted resources. This is just the first instance in which ‘The Cameron Effect’ fails to take into account the Rennard Effect.

The pamphlet goes on to examine how each constituency is likely to fare in the next election. Helpfully, it provides us with a neat little bar chart showing us what will happen in each constituency once you apply a uniform national swing based on an average of 30 opinion polls taken in the summer.

Even if we disregard the fact that the Lib Dem vote share will almost certainly be higher (and the Tory share will be lower) than the polls suggest this summer, this is a ridiculously crude mechanism to apply for three reasons:

a) It assumes that public opinion is constant across the UK with no significant variations. Yes, that probably means that in the South and East we are likely to struggle even more, but it also means that in the North and West we are likely to have an easier time gaining Labour seats.
b) Even Baxter allows you to factor in a tactical vote these days. Littlewood and Preston work on the extraordinary assumption that not a single voter will behave in this way, despite the fact that every single Lib Dem leaflet they receive will be urging them to do so.
c) In several of the seats listed as being at ‘measurable’ and ‘high’ risk (i.e. the seats which their press release lists as likely to go Tory) even the statistics they cite appear much rosier than they claim. Harrogate and Knaresborough is cited ad being at ‘measurable’ risk despite the fact that there has been a swing against the Tories locally and the uniform national swing would have us win. There’s a similar story in Kingston and Surbiton while in Solihull the massive swing locally, we are assured, counts for nothing.

While these factors appear to over-egg the claim that we are especially vulnerable to the Tories, they downplay our chances at gaining seats off Labour. They assume that not a single Tory voter in a Lib Dem/Labour constituency is squeezable. They talk about the sort of swings that we typically got in 2005 as being ‘exceptions’ to the point of being accidents – once again, the fact that in each of our target seats we are to have a campaign on the ground is completely downplayed.

In short, strip away the ‘we’re all doomed’ hyperbole and the prospect doesn’t look anything like as bad as Littlewood and Preston would have us believe. Don’t get me wrong: my prediction is that we will remain fairly static in the next election, losing some to the Tories and gaining some from Labour. And stagnation is something that I personally find extremely depressing. But the sort of wipeout predicted in this paper is simply wide of the mark.

So much for the psephology; what about the policy? Well, if the confident predictions of our demise seem unlikely, then the proposed cure-all is even harder to swallow. Let us assume for a minute that we really are in the ditch that Littlewood and Preston claim we are. Is a single change in policy really likely to make any difference? And that’s before you consider that the sort of tax cutting agenda they propose would by neccessity mean cutting several of our existing spending commitments (Littlewood and Preston decline to say which ones) and our opponents will almost certainly seek to present this in as poor a light as possible.

The entire argument for how promising tax cuts would make the party massively popular is based on a single opinion poll commissioned by the Taxpayers’ Alliance 13 months ago (before the credit crunch). Seriously. If that is really the best they can come up with, the only rational conclusion is that they must be wrong.

Their argument about cutting taxes for higher income earners is even more spurious. As a matter of fact (unrecognised in the paper) the Lib Dems don’t have a policy of clobbering the rich. Our policy is to close loopholes and exemptions only available to the rich. To argue, as they do, that what the average person in a low income really wants is special tax breaks for the rich so that, if they ever become rich, they’ll be able to get out of paying tax as well is taking the ‘aspiration’ argument beyond the point of absurdity. No-one is suggesting a return even to the 50p rate of income tax, so where did this nonsense suddenly come from?

In fact, I could probably make a better case for the popularity of tax cuts for the rich than Littlewood and Preston can. Far from being in the grip of ‘craven caution,’ when it comes to offering tax cuts, the Tories’ climb in the opinion polls began when George Osborne announced an intention to exclude all but the very richest from inheritance tax. So it is fair to say that some tax breaks for the rich are popular. But it is wrong to say that there is an opening in the tax debate. Lackadaisically calling for tax breaks for the rich won’t make us sound distinctive – they’ll make us sound indistinguishable from the Tories. And why should voters support Conservative copies when they can have the real thing?

Overall then, pretty much every single aspect of this pamphlet is poorly researched and ill-thought out. Mark Littlewood is a master of publicity and has managed to make a big splash with this pamphlet, but the fact that it is so, well, stupid, is cause for hope that Liberal Vision will prove short-sighted.