A survey of British business confidence in the three main political parties

Lindsell Marketing, April 2010

Management Summary

• Confidence in the economic management competence of the three main UK political parties is a key issue in the current election campaign
• Very few recent opinion polls have canvassed the opinion of British business, despite the fact that business people best qualified to judge the likely economic competence of each party
• Business analysts, Lindsell Marketing, have attempted to fill this gap by surveying over 1,000 UK firms about this crucial issue
• The ‘Clegg Effect’ is clearly reflected in the survey’s findings (LibDems, 27%), reflecting the Liberal Democratic boost resulting from recent exposure through the televised leaders’ debates
• Conservative support from business on the economic competence issue (Con, 30%), which was clearly in the lead last December, is now neck and neck with the Liberal Democrats
• In the eyes of the business community, Labour languishes in third place, an also-ran at just 17%
• This survey provides an evidence basis for debate around the issue of economic competence, and may encourage analysts to spend more time evaluating how the Conservatives and Liberal Democrats might work together to find common ground for economic regeneration policies and initiatives

Introduction

Recent weeks have seen the emergence of an apparent three horse race in the current UK general election campaign.  The Liberal Democrats have been the clear beneficiaries of prominence and visibility conferred by televised debates amongst the party leaders, although Labour supporters also claim that the Prime Minister’s image has also been assisted by his television performances[1].  The Conservatives, formerly a good distance ahead of both other parties in the opinion polls, now find themselves having to combat two apparently stronger rivals in the bid for a win on May 6^th.

As usual, a flurry of opinion polling has been taking place[2], with an extraordinary hike being seen in the polled voter opinion between 16^th and 18^th April[3] in support of the Liberal Democrats, following the first leaders debate.  Yet throughout these debates, and indeed across the whole general election campaign, no party has offered the electorate a detailed plan of how to eliminate the public deficit and put Britain back in the black.

In the calendar year 2009 the UK recorded a general government deficit of £159.2 billion, which was equivalent to 11.4 per cent of gross domestic product (GDP)[4].  At the end of December 2009 general government debt was £950.4 billion, equivalent to 68.1 per cent of GDP.  The Maastricht Treaty’s Excessive Deficit Procedure sets deficit and debt targets of 3 per cent and 60 per cent respectively for all EU countries.  Clearly, detailed and convincing planning is needed to reverse this situation over the term of the next government.

Economic competence is recognised as a critical issue in general elections, or rather the electorate’s perception of economic competence, perhaps most famously typified in Bill Clinton’s campaign headquarters sign which read, “It’s the economy, stupid.[5]”  However, while much energy in the UK general election campaign to date has (naturally) been devoted to overall polls of the electorate, few have been conducted amongst a similarly representative sample of British business (with the exception of outputs from the British Chambers of Commerce[6]).  The Conservative party has managed to attract qualified approval for some of its policies from the leaders of a number of large businesses[7], but this hardly forms a representation of the views of the two million UK trading companies.

The UK business community consists mainly of firms employing fewer than 50 staff, who (numerically) make up some 97% of British business employers.  Small and medium-sized businesses (up to 250 employees) also generate 50% of the country’s business turnover.

Understanding the views of British business, especially their appraisal of the economic competence of the three main political parties, is an important but neglected area of research and polling.  Business revenues create the larger part of a country’s gross domestic product, and UK firms may therefore be taken as highly expert judges of the economic competence of any current or future government.

Various commentators have noted that all three main political parties do not seem to have paid enough attention to the views of the business community.  In one recent example[8], Joy Nichols, chief executive of the CMB2 Group and a spokesman for The Enterprise Trust, a think tank for industry, criticised all three parties for their piecemeal approach to government procurement through SMEs.

In order that the views of UK Ltd may be better represented in the UK general election debate, business analysts Lindsell Marketing decided to devote one of its regular business opinion surveys to this very question of economic competence amongst the three main parties.  1,011 companies, representing a wide variety of business size brackets, sectors and geographical locations around Britain, were canvassed on a single key question: “Which of the three main political parties do you believe is best placed to give business the kind of intelligent support needed to enable reliable and rapid economic recovery?”  The research took place between 18^th and 25^th April.  Fieldwork was conducted through a combination of online and telephone surveys.

It is hoped that the results of this survey will form an objective data basis to inform the debate over economic competence during the rest of the general election campaign, particularly to policy analysts investigating the most relevant and effective business support strategies in any future government.  Such harmonised policies and co-ordinated government will be critical to creating business health, economic growth and what Digby Jones (now Lord Jones) recently described as “boring stability”[9].

Lindsell Marketing is an independent research organisation and has no political affiliations whatsoever.

Results

The results of the Lindsell Marketing business survey immediately reveal that the Clegg effect has taken as remarkable a hold on the British business community as on the electorate at large.  When the same question was asked back in December 2009, clear water was visible between the Conservatives (43%) and the other two parties, with Labour on 18% and the Liberal Democrats on 17%.  Now, however, the issue of economic competence is starkly revealed as a two horse race –between the Conservatives (30%) and the Liberal Democrats (27%), who are running neck and neck.  Labour, on the other hand, trails on a mere 17%, apparently suffering from the jaded view so often taken of any incumbent government after over a decade in power.

Interestingly, the findings of this business survey show that the residual support for Labour amongst the general electorate is not felt in commerce.  A combination of current consumer opinion polls shows the three main parties all hovering around 30%, but business opinion seems to have discounted Labour.

It may also be significant that 26% of the businesses polled took the view that none of the three main parties was competent to manage and stimulate reliable and rapid economic recovery.  This may leave the issue of economic competence as a space to be occupied with everything to play for.  Should Labour manage to take just a further ten percentage points from this floating business vote, then it would draw level with the other parties.  Either of the front runners could win over this undecided or unconvinced community to establish a clear lead over rivals.  Or, in Scotland and Wales, this business vote could be snapped up by the SNP or Plaid Cymru respectively.

Results by Size Bracket

Respondents answers were also grouped by size bracket.  Four groups were analysed – small businesses (1-49 employees), medium sized businesses (50-249 employees), smaller corporates (250-2499 employees) and larger corporates (2500+ employees).  Peaks of support were observed.  The highest opinion of Conservative economic competence was seen amongst small businesses, whereas for both Labour and the Liberal Democrats, greatest support was seen amongst smaller corporates.

Results by Region

Marked variations were also evident around the different regions of the UK.  Within England, Liberal Democrat support was high in the North East (35%), the East of England (32%) and the South West (32%), but lowest in the Midlands (21%).  The Conservatives showed a surprisingly high level of business good opinion in Wales (42%), with an even higher score in the Midlands (44%) and lowest in the North East (20%).  Labour’s peak of business support in England was in the North East (26%) and lowest in the South West (11%).  Labour’s showing amongst Scottish business was extremely high at 36%.

Conclusions

Reflecting the opinion of the overall electorate, the business community has also experienced a surge of support for the Liberal Democrats, following Nick Clegg’s performance in the recent televised leaders’ debates.

Although the balance of findings from this survey differ substantially between England, Wales and Scotland, the race for business opinion in England appears to be largely a contention between the Conservatives and Liberal Democrats.

As a result of this survey, policy analysts may now wish to spend more time evaluating how the Conservatives and Liberal Democrats might work together to find common ground for economic regeneration initiatives.

About Lindsell Marketing

Lindsell Marketing Limited is a business analysis and marketing consultancy.  Founded in 1994, the company has been researching and investigating business issues for over 15 years in order to provide its clients with important insights into their sectors, markets and business management techniques.  Lindsell Marketing has operations in London, Oxford and Turin.   The company has no political affiliations, and delivers objective insights for its clients.

Methodology

• Online and telephone survey
• 1,011 UK companies
• Respondent profiles: general management, marketing & sales management, financial management, operations management
• Period: 18^th-25^th April 2010
• Representativeness:-
  • Size
    • 1-49 employees                      32%
    • 50-249 employees                  23%
    • 250-2,499 employees             25%
    • 2,500+ employees                   21%
  • Region
    • Scotland                                  9%
    • Wales                                      5%
    • North East                               11%
    • North West                              12%
    • Midlands                                  13%
    • East of England                       9%
    • South West                             11%
    • South East                               31%

• Industry

Representation from:

[2] See particularly, ComRes, Harris, Ipsos-Mori, ICM, Populus, YouGov

[3] Ref. BBC Poll of Polls

[4] Office of National Statistics, UK Government Debt & Deficit, 31 March 2010

[5] James Carville, Bill Clinton’s political strategist in the 1992 election, placed a sign over his desk in the Little Rock headquarters: ‘It’s the economy, Stupid!’

[6] British Chambers of Commerce, Growing business unease over prospect of a hung parliament, 26^th April 2010

[7] The Daily Telegraph, Business leaders give guarded approval to Tory manifesto, 22 April 2010

[8] Panel reception ‘Women in Public Policy’ chaired by Baroness Symons in the House of Lords, Tuesday 20^th April

[9] BBC Radio 4, The Today Programme, 24^th April 2010