Does a hung parliament matter? It certainly does to the politicians seeking a clear mandate from the electorate. Shadow business secretary Ken Clarke voiced the views of many of his colleagues – and those of their Labour equivalents for that matter – when he warned this week that it would be a disaster.
The pound would “wobble”, the markets could take fright and the International Monetary Fund could be forced to intervene in the event of no party having an overall majority after the election, he predicted.
In property, many agree. Speaking this week at a Young Entrepreneurs in Property/Estates Gazette election event (p27), Land Securities chief executive Francis Salway said the prospect of a hung parliament was a cause for concern. “There is a worry that a hung parliament will lead to a sell-off of gilts,” he said.
Surprisingly, some in the industry disagree, saying a hung parliament might well result in better decisions. Eventually, perhaps – but the truth is it would cause interminable delays to those decisions as deals were thrashed out, concessions sought and compromises reached. Worse, delay would cause uncertainty, and uncertainty is the last thing anybody in the industry wants or needs.
And while some of the doomsday scenarios being advanced about the markets’ view of a hung parliament are wide of the mark – some Armageddonists go so far as to invoke the G word (Greece) – at best an unclear result would prompt many investors to sit on the sidelines for a time.
Much more likely would be a weakened pound, rising interest rates and plunging property sentiment. It would make for a miserable summer – and beyond. So a clear outcome next month is essential.
If that’s what the industry doesn’t want, what would be a help? Salway told the audience in London on Wednesday that a period of stable economic growth and an emphasis on ensuring the UK remained internationally competitive topped his wish list. Fellow panellist Stephen Musgrave, Hines’ UK managing director, agreed: “The markets will punish us if this does not happen,” he warned.
A retreat on the Conservative Party’s proposals for third-party rights of appeal is also seen as vital. Indeed, it’s now clear that many property people close to the party had been led to believe that the proposal would not make it into the manifesto. It has – but it should go no further, even though it has attracted Liberal Democrat support.
Tackling public finances will be priority
For now, at least, the industry can afford to put its concerns about planning policy to one side – even if the election result forges a closer working relationship between the Tories and the LibDems.
As political analyst Rebekah Paczek of the PPS Group notes in an article for EG this week (p51): “Should we have a hung parliament, making amendments to planning policy is unlikely to be first on the ‘to do’ list.”
The next government’s priority has to be tackling the public finances without derailing this tentative recovery. And from the sale of public sector assets to ensuring that regeneration is not abandoned, the cuts have profound implications for the industry.
Former government minister Steve Norris told the YEP/EG event that no one should kid themselves that we’ve seen the worst of this recession yet.
That’s true. But there are plenty of things that could make it worse than it might otherwise be.
And a hung parliament is one of them.
