Recent opinion polls raise the prospect of a hung Parliament following the general election. This has put a spring in the step of Labour Party campaign managers who think they might still win and caused jitters in the Conservative Party high command, which suddenly fears election victory may slip away from them. It also caused mild panic among City currency traders, who sent the pound below $1.50.
No-one likes a hung Parliament, apart from the Liberal Democrats and the minor parties, who will try to exchange their support for the governing party for items on their policy wish-lists. Labour and the Conservatives will maintain the fiction that they are focused on winning an overall majority, but privately they will be working out what to do in the event that no-one wins outright.
But what would it mean for businesses if the electorate fails to make up its mind? Of course, there will be a new raft of Ministers and special advisers to get to grips with, but those Ministers only make decisions based on official advice. And, crucially, the officials tasked with shaping and implementing policy will still be at their desks, whatever the outcome. They will remain critical stakeholders for businesses wanting to engage on policy. And policy success, as now, comes from a well-prepared, well-articulated case that persuades officials, not from connections or favours.
Parliament would also become more important, as a minority Government would need every vote to get its legislation through. Minor parties could have undue influence as they threaten to withhold the handful of votes needed to secure a majority in the lobby, while individual MPs would be more able to amend legislation or pressure Ministers into policy concessions or spending commitments. And the in-built Government majority on Select Committees would disappear, increasing the scope for inquiries and reports to be more critical of Ministers – and businesses under scrutiny.
This would require businesses also to engage more widely and actively among MPs, since they would not be able to rely on Ministers riding roughshod over minority views, especially on controversial proposals such as new runways, power stations, wind farms and large-scale retail and office developments. And with enough MPs pressing, Ministers could also be expected to make uncomfortable concessions imposing tougher environmental restrictions or new issue-led taxes.
Businesses may be hoping as much as Labour and Conservative politicians that there is a decisive election outcome. But if there isn’t, good businesses would still be able to negotiate the policy labyrinth, though it may take a little more effort than today.