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There has been a lot of talk recently about the prospects for success of some of the UK’s smaller political parties in May’s General Election.
UKIP has been on the up for a while now and had significant success in last year’s European Parliament elections, while support for the Green Party is at its highest ever level.
A poll published earlier this month shows Labour and the Tories each with less than 30% support for the first time in this parliament. At the same time, UKIP is on 15% and the Greens 11%, with the Liberal Democrats lagging behind on 9%.
But how seriously should we take these outsiders? After all, it is almost inconceivable that anyone bar Labour and the Conservatives will be in power – either as the sole governing party or the senior partner in a coalition – come May 8.
The Greens and UKIP arguably started out as single-issue parties but as their support has grown they have had to at least pay lip service to the idea of having a wider range of policies.
And given that millions of voters in May’s election will be most concerned about the state of Britain’s economy, it is worth examining what approach the outsiders plan to take to financial matters.
Do their economic policies – such as they are – make any sense?
UKIP has yet to publish its 2015 manifesto, but clearly its flagship aim of leaving the European Union – a move strongly resisted by business groups such as the CBI – will have a significant economic impact.
The party says this will instantly save around £20 billion a year in by axing EU “membership subs” and reducing the amount Britain pays in foreign aid.
UKIP then wants to negotiate a new trading agreement with its former European partners and hack away at EU-derived legislation that hampers “British prosperity and competitiveness”.
Nigel Farage and co. also want to raise the personal allowance, abolish inheritance tax, replace part of the 40% tax band with a 35% rate, and scrap the HS2 high-speed rail link as well as the entire Department of Energy and Climate Change and attendant green subsidies.
As you might expect, the Greens don’t exactly go along with this. Natalie Bennett’s party wants to promote an economy that is “ecologically sustainable” as well as “socially just”.
This would mean doing away with traditional indicators of economic progress such as growth, inflation and the balance of payments and replacing them with measures of “sustainability, equity and devolution”.
There should be stricter controls on banks and money-creation, while all individuals will be entitled to a “citizens’ income” that will replace tax-free personal allowances and social security benefits.
The Greens also want to put caps on loan interest rates and encourage more people to work from home.
Whatever your view of these policies, given that neither UKIP nor the Greens will be running the country after the election, do they really matter?
If you’d asked that question five years ago, the answer might well have been no.
But Britain has now had experience of a coalition government, and there is every chance some form of alliance, involving the Lib Dems, Greens or UKIP, will be necessary following this year’s election.
Look at the economic policies in the Lib Dems’ 2010 manifesto: many of the party’s wishes, such as raising the personal allowance, restoring the state pension earnings link and cutting corporation tax, have been granted despite the fact they have been the junior coalition partner.
It may be tempting to write off voting for the Greens or UKIP this spring as a protest, but the polls at the moment suggest some form of compromise will be necessary to form the next government.
As such there is a chance that even the most controversial of these outsider policies could become reality by the end of the decade.
The outcome of the next General Election will undoubtedly affect your clients. As experts in the financial affairs of individuals, do you have firm opinions on the financial affairs of the state? Let’s hear your views.