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Shock Horror! We have a majority government

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On Friday last week many woke up to be greeted with a prospect, that of a majority government, which many had considered unimaginable the day before. I would like to say I was one of those shocked by it, but I wasn’t for two reasons; firstly I didn’t wake up on Friday morning because I had spent the night as part of an accounting panel making live comment as the election results came in and secondly because of my involvement on this panel I had, not unsurprisingly, been asked for a prediction. I had actually predicted just after lunch on Thursday that we would end up with a Conservative Government with a small minority (technically a majority taking in to account any MPs not taking their seats), so actually pretty well exactly what the exit polls suggested when the polling stations closed. Needless to say my prediction was at odds with everyone else on the panel and I did get a bit of stick about it.

However, despite my smug feeling when the exit poll was announced, I too was wrong. So we do have a Conservative Government and they actually do have a majority, albeit a small one, but is this good for David Cameron and those others trying to deliver to the Conservative voter and the back benchers? It was Margaret Thatcher who said that the best government would be by a party with a slim majority. The reason is fairly simple: if you have a large majority you can do pretty well as you please, as even a few dissenting backbenchers don’t matter, but if you have got to constantly ensure all of your party is ‘on side’ you have to be more considered. Remember one person voting against is effectively 2 votes.

So how will the new government feel – in a word cautious. Yes in the initial period the potential awkward squad in the backbenches will be compliant, as they are keenest on the EU referendum and wouldn’t want to upset that. Also there are a few non-Conservative MPs, such as the UDP, who still have conservative leanings. But ultimately the new Government will have to tread warily. No longer can they blame the Liberal Democrats for not bringing something forward and for credibility they now need to put forward and carry through many of the promises, which they might have expected to giveaway in a coalition.

So what might we see?

o Repeal of the fixed term parliament
o Increases in inheritance tax allowances
o Cuts to benefits
o Increase in personal allowances
o Business rating reform

As many have and will continue to say we live in interesting times, but I believe we have a Conservative Government because we had the economy as the highest item in our agenda and it is the conservatives who we believe are most likely to deliver. They now need to do so or the next election will be even more interesting.

Jonathan Russell

Partner

ReesRussell

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