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The 2011 Oldham East by-election

The beginning of the end of the coalition or a political blip

The Oldham East and Saddleworth 2011 by-election majority win for Labour could easily be seen as the beginning of the beginning of the end for the Tory-Lib Dem coalition government. However, it could also be a blip on the political landscape, but what is sure is that there are a lot of people out there questioning the severity of the defect reducing policies championed by the Conservative majority, which contributed to the Labour victory in the by-election.

The most cutting of these is the 2011 VAT increase, which saw the tax rise to 20%, but it will only be a matter of time before government job losses are added to this. Whether or not these changes will create a spiralling effect on the UK economy or bring us back from the brink will only be decided by time now, because the wheels are already in motion and there doesn’t appear to be any going back now.

The by-election victory by Labour in Oldham East & Saddleworth by a majority of 3,558 – up from the previous majority of around 100 – surely signifies that the voters are starting to feel the force of the defect reducing measures.

However, it’s not just voters that are experiencing for themselves the pinch of the VAT rise; the retail sector is also being hit hard in the first few weeks of 2011 with a large number of anecdotal indications that it is going to be a lean fourth quarter for retailers.

If takings continue to fall and jobs start to be cut, it’s possible that the multiplier affect could be kick started negatively, spiralling the economy back into a recession – the fabled double dip. However, if spending confidence starts to return in February and March as the initial panic over the VAT increase subsides, and if the government can inspire new industry to take up the slack of the lost government jobs, then they will probably scrape through a lean winter to achieve their high targets for deficit reduction.

Ed Miliband has good call not to boast too highly about the victory in Oldham East, because it’s a long way away from the next national election and opinions can sway like the wind through troubled waters. He will need to work hard to mount support from the squeezed majority over the next few years if he is to bring Labour back to the seat of power. The fact that the 20% VAT increase is widely considered to be a tax that is heavily weighted against the poorer and lower-middle of society will need to be a big part of his campaign, but will he shy away from repealing it if he is successful in winning the next general election?

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