Cameron Faces Election Test as UKIP and Labour Seek Gains

Britons vote in local elections today in a mid-term test of the popularity of Prime Minister David Cameron’s coalition government.

The polls, in 34 English local authorities and one in Wales, will show how far the opposition Labour Party has managed to win back voters in middle England that it lost when the seats were last contested in 2009, a year before Cameron came to power. They’ll also demonstrate if the U.K. Independence Party, which campaigns for withdrawal from the European Union, can capitalize on opinion-poll ratings as high as 17 percent.

Most of the elections are in traditionally Conservative-voting counties and 1,452 seats are being defended by Cameron’s party, compared with 481 by his Liberal Democrat coalition partners and 245 by Labour. There are still two years to go before the next national parliamentary vote.

“These are mid-term elections in authorities where the Conservatives would expect to do well,” said Tony Travers, a professor at the London School of Economics who specializes in local government. “If UKIP can win some seats and show they damage the Conservatives’ chances of holding seats in a general election, that will be significant for Cameron.”

The Conservatives trail Labour by about eight points in national opinion polls, and Cameron has been criticized by his own lawmakers over policies on gay marriage and immigration that have seen supporters turning to UKIP. It will be a bad set of results for the Conservatives if they lose more than 350 seats, while more than 250 gains would be a good result for Labour, Travers said. It would be a “really, really good” election for UKIP if the party wins more than 50 seats, he said.

Local Issues

The Conservatives have sought to focus attention on local issues in a bid to persuade voters not to register protests in the elections against the national government, which is implementing the tightest fiscal squeeze since World War II.

A ComRes Ltd. poll of 1,502 voters for the Coalition for Marriage, a group opposed to same-sex unions, found that 26 percent of respondents who voted Conservative in the 2010 general election were less likely to vote for the party now as a result of moves to legalize gay marriage.

“This is really a contest about who you want to run your local council,” Cameron said in an interview with BBC Radio 4 yesterday, highlighting moves by Tory-run local governments to freeze council tax, a local property levy. “People should think about the council tax, think about local services, think about which team will deliver good services at a low cost and that’s the Conservatives.”

Protest Votes

The Conservatives have suffered in the polls because they have been making “difficult” decisions on public spending and mid-term governments often draw a protest vote, Cameron said.

A drive by the Conservatives to attack UKIP appeared to have backfired at the weekend when polling showed support for the party increased. One Tory Cabinet minister, Ken Clarke, described UKIP as “a collection of clowns and indignant angry people,” and UKIP leader Nigel Farage said the Conservatives had been spreading smear stories about his party’s candidates.

“A huge amount of time and money has been spent on researching every single UKIP candidate standing in these elections,” Farage told the BBC. “I would speculate that if the same degree of scrutiny was put to the Labour and Conservative Party they would equally find their own embarrassments.”

Farage portrays his party as insurgents taking on millionaires in government who are out of touch with the lives of ordinary people. The party’s website quotes Cameron’s 2006 description of its members as “fruitcakes, loonies and closet racists” and says this is what “politicians from other parties call ordinary, hardworking British people.”

‘Populist Party’

“UKIP is a populist party, it’s developed this anti-elite rhetoric which feeds on the suspicion that immigration policy has raised, particularly in lower-income neighborhoods,” said Patrick Dunleavy, professor of politics at the LSE. “For every five UKIP supporters, three are from the Conservatives, one from Labour and one from the Liberal Democrats; that’s been a pretty stable pattern over time.”

Labour is looking to win back county councils in Staffordshire, Nottinghamshire, Derbyshire and Lancashire, which it lost to the Conservatives in June 2009 when Gordon Brown was at the depths of his unpopularity as prime minister.

The Conservatives are on course to win 31 percent of the vote in the districts being contested today, according to the ComRes poll, while Labour has 24 percent support, UKIP 22 percent and the Liberal Democrats 12 percent. ComRes conducted its survey from April 24 to April 28. No margin of error was given.

Recovery Signs

The elections come with the economy showing tentative signs a recovery that has eluded Cameron since he took office three years ago.

The economy grew 0.3 percent in the first quarter, avoiding an unprecedented triple-dip recession, and figures yesterday showed a manufacturing index rose more than economists forecast in April. Bank of England of England policy maker Ben Broadbent told reporters in London late yesterday there are now more reasons to be optimistic about the outlook.

The deepest budget cuts since World War II have weighed on growth as Chancellor of the Exchequer George Osborne tries to erase a deficit that stood at 120.6 billion pounds ($187.7 billion), or 7.8 percent of gross domestic product, in the fiscal year ended March. The pound has fallen 2.8 percent this year, the worst performer after the yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The benchmark 10-year gilt yield has dropped 15 basis points to 1.68 percent.

South Shields

Labour is also defending the House of Commons district of South Shields in northeast England, which was left vacant after former Foreign Secretary David Miliband quit to become president of the New York-based International Rescue Committee.

While local elections and special elections, such as that in South Shields, can throw up useful information, there is a danger in reading too much into the results, Travers said.

“By-elections and local elections can mean something and sometimes they mean nothing,” he said. “Margaret Thatcher did very badly in by-elections and local elections, then went on to win the 1987 election with a massive majority.”

Polls close at 10 p.m. The South Shields result is scheduled for about 1.30 a.m. tomorrow. Six of the county councils will declare results overnight. The rest will begin counting tomorrow morning, with the results due during the day.

Before it's here, it's on the Bloomberg Terminal.