1. The Political Economy of Labour Support 1997-2005 David Sanders Department of Government University of Essex, UK

2. 1.The objective economy, economic perceptions and political preferences, 1974-2005 2.A decline in economic voting under New Labour? 3.Rival ‘political’ and ‘economic’ models of party support 1997-2005 4.Empirical results Four Sections:

3. 1. The Objective Economy, the Subjective Economy and Governing Party Support A model that worked in the 1980 and 1990s: Interest Rates  Personal Expectations  Government Support Gov t = a + b 1 Gov t-1 + b 2 dPexp t-1 +  b k Events + u t Pexp t = a + b 1 Pexp t-1 + b 2 dInterestRate t +  b k Events + u t A mixed ‘political business cycle’/economic voting model

4. Economic Expectations and (Poll-of-Polls) Governing Party Support, 1974-2005

5. Models of Governing Party Support, 1974 -2005 Clear role for lagged changes in Expectations; none for the objective economy

6. Modelling Aggregate Personal Economic Expectations, 1974- 2005: the impact of changes in interest rates Clear role for (changes in) Interest Rates over 30-year period

7. A decline in economic voting under New Labour? (a) Change in the political business cycle component: An immediate decline in New Labour’s ability to manipulate interest rates in line with the electoral cycle – ceding of interest rate control to the Bank of England Manipulation of taxation burden as substitute?

8. Changes in Taxation Index, 1997-2005 Taxation index constructed by subtracting RPI from Tax and Price Index

9. A decline in economic voting under New Labour? (b) Economic success breeds complacency about the economy?

10. Success breeds complacency? The declining salience of economic issues

12. Success breeds complacency? Governing party support and expectations weighted by salience, 1974-2005 Fit is stronger until mid 1990s; then even weaker

13. 3. Alternative Models of Party Support, 1997-2005 The dependent variables….

14. Why the objective economy doesn’t matter: an illustration Labour support and Unemployment: a positive trend relationship in which both trend down

15. Core ‘Political’ Model Lab t = b 0 + b 1 Lab t-1 + b 2 Costs of Ruling + b 3 Honeymoon + b 4 Sep2000 + b 5 Oct2001 + b 6 Occupation + u t [3a] Costs of Ruling = time trend (-), Honeymoon (+); Fuel Crisis (-); 9/11 bounce (+); Iraq War and Occupation (-)

16. Additions to Core Political Model [3b] Valence short-cut: Blair’s leader ratings [3c] Government honesty and trustworthiness [3d] Service delivery on health and education [3e] Aggregate Personal Expectations [3f] Labour versus Conservative economic management capabilities [3g] Blair’s ratings plus economic expectations

17. Labour Support and Blair’s ratings as PM

18. Labour Support and Government Honesty

19. Labour Support and Service Delivery on Educations and NHS

20. Labour Support and Aggregate Personal Economic Expectations Expectations scale adjusted to Labour Support scale

21. Labour Support and Labour versus Conservative Economic Management Competence Perceptions Economic Management scale adjusted to Labour Support scale

22. 4. Empirical Results: Labour All the models work, except for Services; Labm has odd dynamics

23. Empirical Results: Conservative and Liberal Democrat

24. Conclusions Labour Support affected by: Costs of ruling Blair’s rating as PM Personal economic expectations Honeymoon, 2000 fuel crisis, 9/11 bounce Iraq War/Occupation (cost 2.5 points) Conservative Support affected by: Blair’s ratings as PM Honeymoon, 2000 fuel crisis Liberal Democrat Support affected by: Costs of Ruling, Personal economic expectations

25. Forecasts of Labour Support, December 2004

26. Forecasts of Con and LibDem vote share

27. Long term PM ratings/Expectations Model of Governing Party Support, 1974-2005