Five issues to consider from General Election 2017

So this was the gamble which ultimately did not pay off for Theresa May. For the third time in three years, a UK national vote defied expectations and threw the political establishment up in the air. While many of the uncertainties created by last night's vote will take a while to resolve, here are five issues to consider:

1. New factors shaped this election result. For most of the last 50 years, British elections have been primarily decided by choice of PM and economic competence, with a much higher turnout from older voters. Not this time. After years of low turnouts, voters in the 18-34 age groups seemingly turned out in large numbers to demand their concerns on housing, wage stagnation, student debt and Brexit were listened to. This had obvious consequences in London, university cities and 'Remain' constituencies. With UKIP haemorrhaging support following Article 50 being triggered, its voters split fairly evenly between Labour and Conservatives which was enough to protect many Labour marginals, particularly in the North and Midlands. After seven years of public spending squeezes and a decade of wage stagnation, public sector workers seem to have been more motivated to vote than in the last two elections. 

2. Both main parties have real cause for concern. Despite the Conservatives feeling like they have lost when they won and Labour being elated by losing, neither party has too much to celebrate when it lifts the bonnet. While Labour increased its vote share by 10% to 40%, many of those votes have piled up in seats it already held. By comparison when it last won an election in 2005, it had less support but its 36% was more evenly spread across marginals and safe seats meaning it had nearly 100 more seats than today and a 66 majority. Its comeback is striking but only returns it to its losing position in 2010.  For the Conservatives, only Ruth Davidson's stunning Conservative gains in Scotland prevented a similar return for Theresa May to the 2010 result. It went backwards in London and Wales and failed to make any real dent in the key marginals that delivered decent majorities to Margaret Thatcher and Tony Blair.  Similarly Nicola Sturgeon managed the second best ever result for the SNP in a Westminster election yet will find herself under scrutiny over her call for a second referendum before Brexit. 

3. The immediate impact on Brexit may be overstated. While 'Remain' voters clearly punished Theresa May for her decision to court UKIP voters with a 'Hard Brexit', it is jumping the gun to assume that Brexit is fundamentally derailed. Both Conservatives and Labour manifestos promised to exit the Single Market and Customs Union and deliver the referendum mandate. A Conservative minority Government's likely allies in a Hung Parliament will be the Democratic Unionist Party which itself campaigned to leave the EU. However, it seems far more likely that a minority administration will seek to build greater consensus in Parliament on its negotiating position and how Brexit may be achieved and it seems likely that another election may have to be held before a final deal can be struck. The business community may want to take the opportunity now to stress the economic benefits of maximising continuity and co-operation and the damage that would be caused by a ‘no deal’ approach.

4. The policy agenda will shift with greater consensus required on big issues. The undoubted consequence of a Hung Parliament is greater cross-party consensus within Parliament on all the major issues, whatever the political arrangement put in place between the Conservatives and the DUP. This could impact our industry particularly on long-term savings policy and social care where the politics would be too sensitive for a minority administration to plough its own furrow too aggressively. All the main parties will also want to respond to the turnout of younger voters with more millennial friendly policies on housing, student debt and cost of living, notwithstanding the fiscal challenges posed by a shrinking tax base and worryingly sluggish growth.

5. The insurance and long-term savings industry will have to place consumer concerns front and centre in its dealings with the new Parliament. Whether it is reform of the Discount Rate, cracking down on compensation culture, welfare reform, savings policy or the pension dashboard, all our engagement with the new government and Parliament has to put the consumer benefits at the heart of our advocacy if we are to succeed. We will be launching a new campaign about how our industry is 'Helping Britain Thrive' emphasising how we help our economy grow and act as vital employers, enablers and investors in regions across the UK. 

A final thought. From 1979-2015, the UK enjoyed enormous political stability that made it the envy of the world and enhanced our investability. Yet, we have now had three national elections in two years that have repeatedly thrown our political establishment in the air and demonstrated real divisions within the UK on priorities and perspectives and raised concerns internationally about how stable an investment environment we are for foreign capital. It may be that the shock waves from this snap election will now begin a reset to build more consensus around a way forward that can start to reassure international investors. In the short term, it is more likely to lead to another election well before 2022.