Political update: what do the local elections mean for trade policy?

Tue 9 May 2023
Posted by: Grace Thompson, Chal

Downing street sign

The past weekend saw the Coronation of King Charles III (6 May). It also potentially heralded the upcoming “coronation” of a new political administration at the next general election, expected in 2024.

An election could be called at any point before January 2025, but prime minister Rishi Sunak is rumoured to be considering Autumn next year.

As local election results continued streaming in over the weekend, a clear picture was painted - a country united in dissatisfaction with the political status quo, but divided as to which party could most effectively lead a change. 

The results are in…

The last council result has been declared and the results are fully in.

Labour secured 2,675 seats for a net gain of 537, and the Conservatives took 2,296 for a net loss of 1,061 seats.

The level of Conservative defeats is significant, given losses of over a 1,000 seats had been considered a worst case scenario by party election workers.

In addition the Tories lost control of 49 councils, making Labour the largest party of local government for the first time since 2002.

The local elections also saw some flux in mayoral posts.

In Middlesbrough, Labour’s Chris Cooke won the mayoralty from independent Andy Preston.

In Leicester, although the Conservatives gained 17 councillors, incumbent Peter Soulsby was still re-elected Labour mayor for a fourth term in office with 39.3% of the vote.

However, the Conservatives did have an interesting victory, with sitting Bedford mayor Dave Hodgson losing out to Conservative challenger Tom Wooton.

Lib Dem surge

Despite their loss of the Bedford mayoralty, the picture for the Liberal Democrat party has otherwise been good – they have clearly been one of the winners in this year’s local elections.

They have gained 407 seats and an additional 12 councils. Their success has largely been highlighted in the South and in Conservative heartlands in particular. For example, Liberal Democrats seized control of Surrey Heath council, which is in the constituency of Michael Gove, secretary of state for levelling up, housing and communities.

The Green Party also made gains of 241 seats to reach 481 seats overall and took their first ever council: that of Mid Sussex. While still a modest number of seats overall, this result clearly reflects the importance of the environment and sustainability agenda to many voters across the UK.

General Election predictions

Analysing the results, elections expert at Strathclyde University, Sir John Curtice, told the Today Programme: “If extrapolating from this to what might happen at a general election, the Labour Party should be the largest party in the next parliament.”

He predicted that, based on the local elections results, the projected UK national vote share would be as follows:

  • Labour: 35%
  • Conservatives: 26%
  • Liberal Democrats: 20%

Labour has certainly seen its vote share increase, notably in areas that voted to leave the EU in 2016, which means they may be on course to win back the Red Wall seats lost in the 2019 election. However, experts across the board are questioning whether Labour would win an outright majority at the next general election.

Philip Cowley, Professor of Politics at Queen Mary University, noted that the sort of lead Labour currently has would see them winning “right on the cusp”.

The Liberal Democrats are therefore once again seen as being a potential player in a coalition government, particularly if voters continue in their current patterns of tactical voting to eject the Conservatives from government.

Notably, Liberal Democrat leader Ed Davey has left the door open to a post-election coalition with the Labour Party. Leader of the opposition Keir Starmer MP has also been receptive, but has explicitly ruled out a coalition with the Scottish National Party.

Overall, this local election has felt less like a vote of confidence in Labour than a vote of disappointment in the Conservatives. Starmer perhaps feels this, too, as it is reported that he will warn his shadow cabinet that the “hardest part” is still ahead if Labour want to win the next general election, according to the Independent.

Trade policy going forward

So what does all of this mean for the future of trade policy?

Firstly, with Labour looking likely to win the next general election, the focus will turn to how they will practically implement the trade policy ideas that they have put forward so far – notably, green export hubs and placing binding commitments on FTA negotiators to secure regional economic benefits in trade agreements.

As the Liberal Democrats have strengthened their position and are now seen as a potential coalition partner if there is a hung parliament, it is important to consider what the party has said so far on trade policy.

One theme they have been strong on is the UK’s trade relationship with the EU. Davey, addressing the party conference in York earlier this year, espoused that the Liberal Democrats “are the only ones with a real plan to fix Britain’s trade” and said he would “tear down the Conservatives’ trade barriers, rip up their red tape and rebuild the ties of trust and friendship with our European neighbours”.

Future tension

In a coalition government with Labour, it would be interesting to see how this intention would play out, as Starmer has ruled out any return to the single market or customs union and has vowed a post-Brexit “take back control bill”.

The format of the UK’s trade relationship with the EU might therefore be a point of tension.

General election moves

As the Conservatives seek to regain the public’s confidence ahead of the next general election, it may be that they seek to accelerate any policies which bring economic benefits – such as improving the UK as an investment destination and trying to ‘seal the deal’ on the India trade deal.

They will also be keen to highlight the economic benefits of the CPTPP agreement, Australia and New Zealand deals and encourage as many businesses as possible to engage in international trade, including through e-commerce exports.

Across all political parties, the need to make trade increasingly sustainable going forward is surely going to play a part in manifestos – from the Electronic Trade Documents Bill to green export hubs, from sustainable supply chains to digital trade corridors, the trade policy world is moving forward on the way we conduct international trade and the next UK government will have to do the same.