circleWhether you call them manifestos or contracts, the documents that political parties publish before the election are often not as substantial as their lengthy pages might suggest. Filled with best-case scenarios, unspecified proposals and questionable costing, it’s hard to imagine what impact each party would have on the UK if they implemented what they claim. So I’ve been inputting the party documents into the political strategy video game Democracy 4 to see how these policies play out. The results are… well, you see what I mean.
Democracy 4 lets you play out your political fantasies (or nightmares) and see how your choices affect your eventual reelection. Developer Positech Games has modeled various democracies, including the UK, with their national and private institutions, government policies and approximate taxes, using publicly available data. The simulation is inhabited by thousands of virtual voters. In the UK, most citizens identify as capitalists, but they could also be middle-income, rich or poor, farmers, commuters or self-employed. In each country, the composition of the virtual population is different. Applying a CO2 emissions tax policy in the US, where many citizens care about their cars, would disappoint more voters than in Japan, where most people use public transport.
Democracy 4 can’t be a verbatim simulation of the British political circus of 2024 (because, honestly, what could it be?), but it can loosely play out each major party’s plan to see who it benefits and who it angers, and, most importantly, whether it achieves anything.
Democracy 4 doesn’t model Scotland and Wales separately, so it can’t capture the particularities of the SNP and Plaid Cymru plans. I focused on the Conservatives, Labour and the Liberal Democrats. To be fair, in each simulation the parties come to power on 5 July with a slim 10% majority and face the same economic challenges. Will Labour be able to solve the funding gap for all sectors of society by growing the UK economy? Will the Conservatives’ tax cut plans stimulate business? And will the Liberal Democrats’ wealth tax and investment in public services eliminate the national debt deficit?
The answer to all these questions is a resounding “no”, but how these failures play out will truly show the scale of the challenge facing the party that takes control of Westminster on 5 July.
The Conservatives, Labour and Liberal Democrats have all made the economy their top priority, referring to the cost of living crisis and the state of the country’s finances in the opening paragraphs of their manifestos. As Tom Waters, deputy director of the IFS, says, this is no surprise. Recently commented“The UK has gone from being one of the fastest growing economies before the Great Recession to being one of the slowest growing.”
Democracy 4 describes this stagnation in terms of what it calls an uncompetitive economy, which acts as a constant drain on the country’s Gross Domestic Product (GDP) and the well-being of Britain’s capitalists (who, as mentioned above, are the majority of the population). For the party to solve this problem, well-paying jobs must be created through planned tax cuts, investment and new policies.
The UK’s next government faces more than just a sluggish economy. Over a decade of borrowing has left the country hugely in debt, with interest payments eating up a significant portion of tax revenues. This deficit needs to be reduced so people’s taxes can be used to fund public services. The Conservatives aim to reduce government debt and stimulate the economy by cutting taxes and spending. Labour wants to expand tax revenues and get out of the problem. The Liberal Democrats plan to raise taxes on the wealthy.
At the start of each party’s parliamentary term, I will reflect as far as possible the costs of the tax cuts and spending increases set out in their manifestos. For the Conservatives, that means cutting National Insurance contributions and civil service numbers. For Labour, that means closing non-resident tax loopholes and implementing tax changes targeted at the same people affected by VAT on private schools. For the Lib Dems, big taxes on banks, corporations, tech companies and the airline industry, and big investment in public health and welfare services.
All political parties are banking on cracking down on tax evasion to raise more than £5 billion. This may seem like a policy that will only hit the very wealthy, but in reality: According to IFSthat would hit taxpayers at all levels. I tried to replicate this with a tax that hits every demographic, and they weren’t happy.
In Democracy 4, each turn advances the timeline by three months, and party policies have an immediate impact. Increased investment in the NHS and police has increased health levels and reduced crime levels. All three parties have also reduced poverty. Maybe better times have finally arrived in the UK.
Unfortunately, bad times came around the next turn. After cutting prison staff, the Conservatives found themselves embroiled in a prison overcrowding crisis (on schedule, if you believe the HMRC officials) and crime rates soared again. The Liberal Democrats saw GDP begin to plummet, international organisations downgraded the country’s credit rating and raised debt interest rates, and Labour saw airlines declare bankruptcy and business confidence take a hit.
As the months passed, other parties followed the Liberal Democrats’ lead and received CCC credit ratings. Soon after, proving just how fragile British business was, my advisers began warning me that an exodus was on the way.
Business exodus happens when stability and productivity are low, when taxes on business are high, or, in the case of the Liberal Democrats, when both are true. Once the exodus starts, GDP falls, capitalist voters become angry and Britain’s already strained finances become even worse.
At least in Democracy 4, it seems that big companies are on the verge of leaving the UK when their income is threatened. This move sheds some light on the Conservative and Labour tax policies. To have any hope of bringing down the government’s mountain of debt, no matter who is in power, we cannot risk a single big company leaving the UK and going beyond the reach of HMRC. The UK is on the brink of a downward economic spiral that could lead to a debt crisis if we make one wrong move.
The election has been centred around each party’s economic plans, which are the focus of most of the new policies. Other areas, such as education, have seen budget allocations stay roughly the same. Labour has pledged to recruit 6,500 new teachers, but as the BBC’s Nick Robinson pointed out in his Panorama interview with Keir Starmer, that works out to one new teacher for every three schools.
Unfortunately, Democracy 4 says maintaining schools’ current standards will lead to further economic problems. Both the Conservative and Labour parties have created highly skilled jobs through investment, but have faced skills shortages because schools have failed to prepare students to take up those jobs.
Thanks to heavy investment in schools, the Liberal Democrats were the only party to improve education, but taxes on tech companies and corporations meant that a highly trained workforce was unable to get into high-skilled jobs, and Britain was in danger of becoming a technological laggard.
The result has been a fall in each party’s GDP, a rise in debt deficits, a downgrade in the country’s credit rating and an exodus of businesses. Democracy 4 may only be a sketch of Britain, but it highlights just how closely tied our national services are.
Ironically, the poor economic situation and high unemployment meant that illegal immigration fell for all three parties, as did legal immigration, but immigration rose – essentially nobody wanted to live in the UK.
At the end of each party’s five years in power, the economic and electoral prospects were not very good. If all three parties were successful on the economic front, government debt would fall, incomes would rise and the deficit would shrink. None of them achieved this, but the best-performing party did. Under the Conservatives, the deficit increased by just over £7 billion to £42.9 billion, which seems like a lot. But under Labour, the deficit more than doubled to £74.66 billion, but that’s still paltry compared to the Liberal Democrats’ increase to £95.7 billion.
In the 2029 election, all three parties were destroyed. Labour came last with 13.6% of the vote, followed by the Conservatives with 14.6%. The Liberal Democrats secured 22.3% of the vote despite having worsened the economy, because under their leadership the country saw great improvements in health and education.
Democracy 4 is not a prediction of what is to come. It is impossible to produce the same version of every policy in the manifesto, nor to reflect exactly what cuts and restructuring the parties are proposing for each part of the public sector, nor to know how the governing party will respond to new challenges. All I have done is crunch the numbers and wait to see how things turn out. But still, the game shows the magnitude of the UK’s problem and how big a challenge it is to get out of it by cutting, growing and investing. If you think you can do better than the major parties, why not? try out?
