IWhether they are called manifestos or contracts, the documents published by political parties before an election are far less substantial than their many pages suggest. They are full of optimistic scenarios, poorly detailed proposals and dubious cost estimates, and it is difficult to imagine the impact each party would have on the UK if it followed through on their proposals. So I have been feeding party literature into the political strategy video game Democracy 4, to see how these policies might play out. The results were… well, you’ll see.
Democracy 4 lets you live out your political fantasies (or nightmares) to see the impact of your decisions and, ultimately, whether you can be re-elected. Drawing on publicly available data, developer Positech Games has modeled several democratic nations, including the UK, with approximations of state and private institutions, government policies, and taxes. Within this simulation live thousands of virtual voters. In the UK, most citizens consider themselves capitalists, but they can also be middle-income, rich or poor, farmers, commuters, or self-employed. For each country, the composition of the virtual citizenry differs: implementing a CO2 tax policy in the US, where many citizens care deeply about cars, will disappoint more voters than in Japan, where most people use public transportation.
While Democracy 4 may not be an exact simulation of the political circus in the UK in 2024 (frankly, what could be?), it does allow us to take a broad look at each major party’s plans and see who it benefits, who it angers, and, most importantly, whether it achieves anything.
As Democracy 4 does not model Scotland and Wales individually, it is not possible to reproduce the specificity of the SNP and Plaid Cymru’s plans. I have focused on the Conservatives, Labour and the Liberal Democrats. To be fair, in each simulation the party takes power on 5 July with a slim majority of 10%, facing the same economic challenges. Can Labour solve the underfunding across all areas of society by growing the UK economy? Will the Conservatives’ plans to cut taxes stimulate businesses? And will the Liberal Democrats’ wealth taxes and investment in public services help close the country’s debt deficit?
The short answer to all those questions is a resounding “no”, but the way these failures are playing out really illustrates the scale of the challenge facing the party that takes control of Westminster on 5 July.
The Conservatives, Labour and the Liberal Democrats all put the economy at the heart of their concerns, referring to the cost of living crisis and the state of the country’s finances in the opening paragraphs of their manifestos. Little wonder, as Tom Waters, associate director of the IFS, points out, Recently commented“The UK has gone from being one of the fastest growing countries before the Great Recession to one of the worst performing.”
Democracy 4 represents this stagnation with a situation called Non-Competitive Economy, which acts as a constant drain on the country’s gross domestic product (GDP) and the happiness of UK capitalists (who, as mentioned, make up the majority of the population). For the parties to solve the problem, their planned tax cuts, investments and new policies must create well-paid jobs.
The stagnant economy is not the only problem facing the next UK government; more than a decade of borrowing has left the country in huge debt, and interest payments are eating up a substantial chunk of tax revenue. That deficit needs to be reduced so that people’s taxes can be spent on public services. The Conservatives aim to reduce public debt and stimulate the economy by cutting taxes and spending. Labour hopes to overcome the problem with its growth, by increasing the pool from which it can draw tax revenue. The Liberal Democrats plan to raise taxes on the highest earners.
At the start of each parliamentary term, I simulate as closely as possible the manifesto costs of tax cuts and spending increases. For the Conservative Party, that means cutting social security contributions and civil service numbers across the public sector; for Labour, I implement tax policies targeting the very people affected by closing loopholes for non-residents and VAT on private schools; and for the Liberal Democrats, a major tax on banks, corporations, tech firms and the aviation industry, along with massive investment in state health and welfare services.
All parties have raised £5 billion or more from the fight against tax avoidance. Although it may seem like a policy that would only affect the very rich, in reality, according to the IFSwould affect taxpayers at all levels. I recreated this with a tax that would affect the “everyone” demographic, and I can tell you they weren’t too thrilled about it.
Each turn in Democracy 4 advances the timeline by three months, and party policies have an immediate impact. Increased investment in the NHS and the police saw health standards rise and crime rates fall; all three parties also saw a reduction in poverty. Perhaps the good times are finally coming to the UK.
The next step, unfortunately, was bad times. After the civil service cuts to prisons, the Conservatives found themselves in the grip of a prison overcrowding crisis (just in time, if HM Prison and Probation Service officials are to be believed) and crime figures rose again. The Liberal Democrats saw GDP begin to plummet, prompting international agencies to downgrade the country’s credit rating and raise the interest rate on its debt, and Labour saw an airline go bust, which hit business confidence.
As the months went by, the other parties joined the Liberal Democrats in the CCC’s credit rating. Soon after, UK companies showed how volatile they can be. Advisers began warning me of a looming corporate exodus.
Corporate exodus is triggered when stability and productivity are low and corporate taxes are high – or, in the case of the Liberal Democrats, when both are the case. Once it starts, GDP declines and capitalist voters get angry, exacerbating the UK’s already tight finances.
In Democracy 4, at least, it seems that big business is one hair away from leaving the UK if its revenues are threatened. This dynamic sheds some light on the tax policies of the Conservatives and Labour: to have any hope of reducing the mountain of government debt, whoever comes to power cannot risk any big business leaving the country and falling outside the reach of HMRC. The country is one misstep away from entering a downward economic spiral that ends in a debt crisis.
Much of this election has been about the parties’ economic plans, which are the linchpin of most of their new policies. Funding in other sectors, such as education, remains broadly similar: Labour has pledged to hire 6,500 new teachers, but as the BBC’s Nick Robinson pointed out in his interview with Keir Starmer on Panorama, that only works out to one new teacher for every three schools.
Unfortunately, according to Democracy 4, maintaining the current level of our schools creates further economic problems. Both the Conservatives and Labour faced a skills shortage because, despite creating highly skilled jobs through investment, schools were unable to produce students who could take advantage of them.
Thanks to significant investment in schools, the Liberal Democrats were the only party to improve education, but because of the tax they imposed on tech companies and businesses, the highly skilled workforce had no highly skilled jobs to fill. The UK was in danger of becoming a technological backwater.
The result for all parties was a reduction in GDP, a rise in the debt deficit, a downgrade of the country’s credit rating and a business exodus. Democracy 4 may only be a snapshot of the UK, but it highlights how closely connected the country’s services are.
Ironically, the poor state of the economy and high unemployment meant that illegal immigration fell for all three parties. Legal immigration did too. However, emigration increased. Basically, no one wanted to live in the UK.
At the end of each party’s five-year term, the picture was not very encouraging either economically or electorally. If all three parties were successful on the economy, public debt would be reduced, revenues would rise and the deficit would be reduced. None of them succeeded, although there was one party that performed less badly. Under the Conservatives, the deficit rose by just over £7 billion to £42.9 billion, which sounds like a lot. However, under Labour, it more than doubled to £74.66 billion, a paltry figure compared with the Liberal Democrats, who saw it rise to £95.7 billion.
All three parties were swept aside in the 2029 election. Labour came last with 13.6% of the vote, followed by the Conservatives with 14.6%. The Liberal Democrats, despite sinking the economy, won 22.3% of the vote because under their leadership the country saw significant improvements in healthcare and education.
Democracy 4 is not a forecast of what is to come. It is not possible to create an identical version of every policy in the manifestos, nor to accurately reflect the cuts and reorganisations that the parties propose for every part of the public sector, nor how the governing party will respond to emerging challenges. All I did was crunch the numbers and watch how things played out. But all the same, the game illustrates the scale of the UK’s problems and how significant the challenge of cutting, growing or investing our way out of them will be. If you think you can do better than any of the main parties, why not? give it a try?
