UK election has only one loser: the British people

The early UK election highlights the harm done by the Brexit vote, but also its short-term winner: the Conservative party. Hidden for now is the long-term loser: the British people.

With their anti-immigrants attitude, the Tories have managed to hoover up voters from UKIP. They also seduced many who would have voted Labour in the same way: by blaming immigrants for rising inequality.

To be fair, this is not Theresa May’s doing. The Conservatives had adopted this policy way before, when David Cameron was still prime minister.

They went so far with it as to call an ill-advised referendum on leaving the European Union, a dangerous PR exercise which they lost. Yet this was not enough to teach them that politics should be subordinated to the country’s good, and not the other way around.

The Tory election manifesto, released last week, shows their confidence that they would win the election, but also their short-sightedness about the post-Brexit economy.

They are going for pensioners at a rate that no other Conservative manifesto did before. Besides means-testing the winter fuel allowance for pensioners, they are also going for their homes.

For the winter fuel allowance, the fact that it will be means-tested rather than universal means that many people simply will not claim it. The elderly in particular are loath to fill in forms describing in detail their dire circumstances.

This will create savings for the government, for sure, but it will be bad for those pensioners who qualify for the winter fuel allowance but will not claim it.

The homes-for-care bargain goes like this: you do not have to sell your home during your lifetime if you receive care at home, but the costs will be taken from the proceeds of the sale of your home after you die. Before, that was the case only for people who ended up going into an old people’s home.

The manifesto says: “One purpose of long-term saving is to cover needs in old age; those who can should rightly contribute to their care from savings and accumulated wealth, rather than expecting current and future taxpayers to carry the cost on their behalf. Moreover, many older people have built considerable property assets due to rising property prices.”

Few would argue with the idea that savings should be used first, before resorting to taxpayer funds. But unfortunately, for many people their home is their only form of saving. In the UK, people have been pushed into property by successive governments, which have subsidised home prices with various “buy-to-let” programmes.

The Bank of England’s record-low interest rates policy added fuel to an already red-hot property market, where buyer after buyer piled in. Foreign investors, some seeking to hide ill-gotten money, also contributed to what has become one of the biggest property bubbles in the world — at least in London.

But what goes up at some point comes down as well. The fact that so many people have piled up into property and have no other assets (you often hear people saying “my home is my pension” in the UK with pride, rather than apprehension) bodes ill for the level of savings that can be used for care in old age.

Brexit could very well be the catalyst to reverse the ascending trend of home prices. In fact, the trend has reversed in London since last year, and now rents seem to be following suit, as they are falling quite rapidly.

Fewer people are likely to come to the UK from abroad as job prospects worsen, the pound is weak and general hostility against foreigners is visible. So the property downturn could accelerate.

“Make no mistake, the central challenge we face is negotiating the best deal for Britain in Europe,” Theresa May said when the manifesto was launched. “If we fail, the consequences for Britain and for the economic security of ordinary working people will be dire. If we succeed, the opportunities ahead of us are great.”

However, Brexit cannot be a success. Not only because if it is, it would encourage other countries to leave the EU. But losing free access to your biggest export market does not lead to prosperity, no matter how optimistic you are. Over the long term, the British people will lose from Brexit.