It’s still the economy, stupid, which is why the two Eds should be worried about 2013

by Atul Hatwal

The Christmas break will have been a time for some self-congratulation in Labour leadership circles. A solid poll lead, a divided coalition and high hopes for the coming year.

Ed Miliband had a passage in his stump speech on the circuit of pre-Christmas Westminster receptions where he talked about the unprecedented position of strength Labour is in for a new opposition, with such a lead at this stage in the parliament. He is factually right, but then the competition for most effective new opposition is not terrific. In the past 33 years, there’s a choice of two: either William Hague’s Tories or Michael Foot’s Labour party.

And at this point in Mrs.Thatcher’s first term, two and a half years after the election, even Michael Foot managed an average lead over the Tories of 3% (averaging the four polls in November 1981 – h/t Mark Pack and his magnificent polling spreadsheet).

When considering unprecedented political phenomena, Ed Miliband, and indeed Ed Balls, might want think more carefully about where the party stands with voters on economic competence.

Decades of polling gives a very clear message: no opposition has won an election without a commanding lead on the economy.

In 1979, voters preferred Jim Callaghan to Margaret Thatcher as PM by 50% to 31%, but still elected the Tories who led on economic issues by an average margin of 10%. In 1997, Labour led by 10% on the economy at the election, while in 2010 the Tories led by 8%.

Currently. Labour is 11% behind on economic competence and no opposition has gone on to win the next election when trailing the government on the economy, after two and half years.

Typically, there just isn’t the time left in the parliament to overhaul the government lead and build a sufficient cushion prior to the inevitable narrowing of the polls as election day draws near. Based on the polling facts, a Labour victory in 2015, from this position, would truly be unprecedented.

Looking at the detail of the  fall and rise of the Tories’ lead through 2012 highlights just how difficult it will be for Labour to rewrite the rule book in 2013 and build a sufficiently robust lead on the economy to win the next election.

George Osborne’s catastrophic budget presaged a drop in the Tory lead, as did the double dip into prolonged recession. Seven months of appalling economic news cost the Tories 13% but still left them 4% ahead of Labour.

That’s worth reflecting on for a moment – even after such an epic level of economic failure, the Tories were still more trusted on the economy.

Then, in the last two months of the year, the return of growth and the fall-out from the financial statement have added 7% onto the Tories lead. More than anything else, this end to 2012 should have set the red warning lights flashing at Labour HQ, for two reasons.

First, any return to sustained growth in 2013 will put the Tories out of sight on the economy. Even if there is a triple dip, the evidence of 2012 is that this costs the Tories 4-5% per quarter. Six months of recession would still leave the Tories narrowly ahead and currently few are predicting two consecutive quarters of a shrinking economy.

Based on 2012, even a flatlining, barely growing economy will help the Tories consolidate a double digit lead over Labour.

Second, the defining confrontation between Labour and Tories on welfare following the Autumn financial statement in December seems to have bolstered the Tory lead on the economy. The nuance of Labour’s message that the majority of the benefit cuts will hit those in work and hurt the economy is being lost. Instead, what appears to be getting through to the public is that Labour will increase welfare spending, which for a party that is deeply mistrusted on spending is lethal to rebuilding a reputation for economic competence.

For the party, it’s always much easier to focus on the positive news of the headline poll lead. To enthusiastically retweet the latest overnight poll advantage and go to bed happy. But sooner, rather than later, the difficult questions on Labour’s lack of headway on the economy will need to be addressed.

It’s not good enough to talk about a work in progress or slowly building the Labour case. We are now further behind the Tories on the economy than at the time of the last election, and that’s after all of the pain of the past two and a half years. Noone in any position of leadership within the party has proffered any type of explanation or plan to turn this deficit around, other than to keep on doing what has palpably failed since 2010.

Unless Labour’s leadership is suggesting that the party can defy political gravity and somehow win while deeply mistrusted on the economy, Labour’s current course seems a lot like Einstein’s reputed definition of insanity.

Without some active leadership and change in strategy, 2013 is going to be a long, tough year for the realist wing of the party.

Atul Hatwal is editor at Uncut

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18 Responses to “It’s still the economy, stupid, which is why the two Eds should be worried about 2013”

  1. Realist says:

    Yet another article by someone whose poll driven analysis has been so shallow and blind in the past…Remember when Atul got rebuked by Anthony Wells for his poll illiteracy?!

    There is no doubt that economic competence is important. As is our positioning over welfare (and immigration). But Atul is proving that the bitterites of the Labour Party are out of touch with public opinion.

    We’ll see what happens when the cuts to in work benefits start hitting low and middle income families in April. The contrast with the top rate tax cut for the Cabinet’s Christmas card list will become ever starker.

  2. Robert says:

    We should be honest enough to admit that the voters are right not to trust Labour on the economy when the disasters of 2007-8 are considered. The reasons that Labour will have a chance in 2015 are Ed Miliband’s sensible leadership, left-wing Lib Dem voters moving to Labour, the voting system, a split right-wing vote and the coalition’s many mistakes on the economy. To be honest, Labour would not have a chance in 2015 if we had a sensible voting system.

  3. LondonStatto says:

    Bottom line is the public still blames Brown and his team (especially Balls and, to a latter extent, Ed Miliband) for getting the country into the mess in the first place. Thus the second dip is seen as still being in large part Labour’s legacy.

    More evidence for this is seen in YouGov’s regular “who do you blame for the cuts” where the share blaming Labour at least in part is still consistently over 60%.

    It’s difficult to see how Labour can improve this without jettisoning Balls completely.

  4. Ex-labour says:

    Politicians think the public are stupid. Some are of course, but most have often proved them wrong when voting. The red Ed’s are a toxic brand and the public recognise their association with economic incompetence under Brown. Labour are perceived as the scroungers friend and the strivers enemy. The constant whining about bankers and multinationals tax arrangements may bring some short term popularity but its now wearing thin. Unemployment is falling steadily and the Tory message on Europe is finding favour whilst Labour bleat on about welfare reforms realising of course that the Tories have them boxed in with an untenable position on increasing the welfare budget whilst capping public sector pay. If the economy moves more positively in the next two years the election may not be as cut and dried as the left think.

  5. Mark Pack says:

    Thanks Atul; glad you find it useful!

  6. aragon says:

    Well Conservative Home, thinks the Conservatives can’t win and Labour Uncut, or at least Atul thinks Labour can’t win, so that is no overall control again, perhaps with Labour as the largest party. For some of the reasons Robert has given.

    “Noone in any position of leadership within the party”

    The phrase “any position of leadership” let’s me off the hook. I have a plan … However the worrying part is what happens when/if they do get into power (no change, apart from a small fiscal stimulus and the hope that the economy must recover sometime…)

    @Realist, Economics, Welfare and Immigration are seen as Labour weaknesses. Ed Milliband has only made small concessions towards public opinion on these issues. Yes: Government policies may be unpopular among those affected, but they don’t vote Tory, and Browns Tax Credits are currently the subject of attack.

    What do the public do ?

    When presented with no good choices, and the repeated economic failure of the political class ?

  7. e says:

    The political gravity you speak of is sucking out the remnants of the discretionary spending power of millions. (Hurting immediately and directly the “skivers” and losers, but of course no poll worries on that score – even with falling turnout, hey?). Anyway, your concern: perceived competence. Reducing aggregate demand whilst privatising anything that moves, post the economic magic of neo-liberalism, isn’t going to work. And there’s no chance of an imminent election. So who would benefit from a Labour manifesto now? Maybe journalists, particularly the type that like to enlighten with well rehearsed doses of misinformation.

  8. Renie Anjeh says:

    Look, there is a stark difference between ‘realism’ and purposefully being all doom and gloom. Of course the economy is important, but the real fact of the matter is that there is no certainty over who is really has got trust on the economy because in recent months, it has been Labour. The gap has undoubtedly narrowed, remember where the party was on trust on the economy at the beginning of 2012? What has been forgotten in this article is that Labour was actually 22% behind on the economy, 3 weeks before the ’97 election.
    Labour does need to have a plan for fiscal responsibility, and it does need to clearly identify the cuts that it would make or other means it would reduce spending – sticking to the Darling Plan. But if that means endorsing the failed Tory plan on the economy which the majority of the public have rejected, then not only is that fiscally irresponsible but extremely stupid.
    Labour does need to talk about welfare reform, but this article seems that all we need to talk about is cutting benefits. That doesn’t actually address any question about how Labour can genuinely transform the welfare state, it just gives the impression we will mimick a Tory plan which we cannot morally support (and for good reason). What we need to be talking is about is to build a welfare state which rewards contribution and work, protects people from Beveridge’s Five Giant Evils and where universal services are prioritised over universal benefits. That is the real discussion that we need to have about the welfare state and we need to have policies that speak to that vision. The reason why people are backing cuts to benefits, is because they do not think the welfare state represents that vision.
    Also, let’s drop this Michael Foot and William Hague point. We all know that polling has become a lot more accurate over the years and there is no threat of a swerve to the extreme left under Ed’s leadership and that Labour has become extremely united whilst our opponents have become increasingly divided. Labour took Corby with a swing which was above the national polling average and has made way in local authorities where there are seats we need to win such as Carlisle, Reading, Great Yarmouth, Harlow, Thurrock, Birmingham, Redditch, Plymouth and we gained a lot more seats in areas like Swindon, Basildon and Worcester. We need to continue that trend, remaining united and adopting credible policies. Turning into our enemies, doesn’t win elections.
    However, that being said, although Labour is on track to win an overall majority and the Tories have no chance of winning the next election – we must not be complacent. We need all the best talents in the party on the top table such as Tristram Hunt, Stella Creasy, David Miliband, David Lammy and maybe even Hazel Blears or Gloria de Piero. However, if our position on the economy fails to improve to a strong standard, then it might be worth Ed Miliband moving Ed Balls to Shadow Foreign Secretary and replacing him with Alistair Darling.

  9. Joe Roberts says:

    This is yet another version of the same article that Atul Hatwal, Peter Watt and Rob Marchant have been publishing on this site for the last two and a half years. It’s depressing, tedious and totally predictable.

    We know that you don’t rate the two Eds. We know that you think the party’s current political strategy is wrong. What we don’t know is what policies you think the party should be advocating?

    Reading between the lines, it appears that you guys think we should run on much the same policies as the Tories – for example, supporting the accelerated pace of deficit reduction (although current Coalition policy doesn’t seem to be reducing the deficit at all!) and real-terms cuts to in-work benefits.

    In some respects you appear to be to the right of the current Conservative leadership – for example, Rob has advocated regionalised pay rates in the public services, which George Osborne has so far shied away from. And you attacked Ed M’s call for better behaviour by big business in his 2011 conference speech, even though David Cameron promptly jumped on board the bandwagon that Ed had started rolling. I frequently see impassioned defences of the banking industry from your contributors on this site.

    Those of us who serve the party as councillors and activists, rather than pontificating on scarcely-read blogs, can see the damage that these policies are doing in our communities. We can see income and spending power being sucked out of our local economies. We see the hardship that has led to food banks and soup kitchens being established in our towns for the first time since the war. I have had people in tears at my advice surgeries. And you expect me to believe that this is the way forward for our party, and that I should be advocating these policies to my electorate?

    Democracy is about making choices. To make choices, the voters need an alternative. You don’t think that they deserve one.

  10. D.B. says:

    Of course the Labour leadership will be aware that the party faces an uphill struggle on the economy, and that it’s currently in a losing position on this issue. Would you really expect Miliband to come out and acknowledge this publicly? How would it help Labour’s standing on the economy to talk down its chances of winning in 2015?

    As for what can be done, the answer is frustrating, fraught with risk, but simple: at this stage, not very much. It’s simply too early for Labour to produce the kind of detailed economic strategy which is needed to enhance the public’s confidence in its economic competence. Labour’s standing would be a damn sight worse if they handed the Tories and the media exactly what they want: i.e. a chance to spend the next 2-3 years fixating on Labour policy, deconstructing every nuance and pouring scorn and derision over every aspect of what Labour has to offer.

    Frustrating as it is, it is imperative that Labour holds its nerve and waits for the right moment, which will come in the direct lead-up to 2015, and in the meantime take pot shots and make gains where possible.. It’s a war of attrition.

  11. Steven says:

    Renie: “maybe even Hazel Blears or Gloria de Piero.” [as talents worthy of a place at the top table]

    Goodness mate – you must have done some damage to the drinks cabinet on New Year’s Eve! But admittedly, the absence of talent within the PLP gives cause for deep concern.

  12. paul barker says:

    A refreshing dose of realism but what evidence do you have that anyone is listening ? Most of the comments from labour supporters seem to think its enough to yell “Blairites” & move on. I agree with you but Im a libdem.

  13. Renie Anjeh says:

    Very funny Steven. I made that comment on Labour Uncut before I started taking bottles of WKDs, I can assure you.
    I think Hazel Blears and Gloria de Piero could bring a breath of fresh air into the Shadow Cabinet. They are both working-class ‘strivers’ who aren’t from the South, who most people can understand and they are both on the right of the party (well, certainly in the case of Blears). I also like the work Blears has been doing on Social Action and what de Piero has been doing on reconnecting the political classes with the public.

  14. Renie Anjeh says:

    @ Joe Roberts I sympathise with some of the concerns (though, they are not from the right of the Conservative leadership seeing as I remember Rob Marchant backing rent controls on LabourList), and I would warn against Atul Hatwal pretending that the party is in a very bad state when in fact we are doing quite well, but having an alternative does not mean lurching to the left which is what you are seeming to suggest. As the Conservative Party veer to the right in fear of losing votes to UKIP and the Lib Dems remain in a political no-man’s land where they are losing a huge proportion of their votes to Labour (I think it may even be almost 50%), it is now the duty to the Labour Party to grasp the centre ground which is now open territory. That means a credible plan to reform both the market, reducing the deficit and bringing growth back to our economy. Only then can we be sure of winning a majority in 2015.

  15. Joe Roberts says:

    @Renie – just to clarify, I’m not suggesting a lurch to the left, I consider myself to be on the right of the party. The only way I could be considered a leftie would be if you compared me to Rob Marchant or Atul Hatwal. Generally I feel very comfortable with the direction in which Ed is leading the party.

    Essentially it is New Labour, but adapted for an age when there is no longer an ever-expanding pie that allows everyone to have a bigger slice and when a rising tide no longer lifts all boats. At times like this, decisions have to be made about the distribution of income and economic pain, something we didn’t have to do in the decade between 1997 and the start of the credit crunch. I believe that those with the broadest shoulders should bear the heaviest load – not a view that Atul or Rob appear to share.

  16. Renie Anjeh says:

    @JoeRoberts – Oh well then I broadly agree with you, but the whole language of ‘alternative’ is a language which is used mainly by the left of the party, so I am rather suspicious of it. I would like to see Atul Hatwal write something positive about what Ed is thinking, probably fleshing out his own ideas for fiscal discipline and One Nation rather than attacking the leadership even when it is doing well.

  17. Rev Graeme Hancocks says:

    What really poor, lazy “analysis”. I would recommend anyone who is read this quite poor article to read Anthony Wells article on same subject in “UK Opinion Polling”. The difference between Well’s solid analysis and the above effort rather akin to the difference between a high school essay and a professorial thesis.

  18. uglyfatbloke says:

    If the economy starts to recover this year or next the Tories will be strengthened by that, but equally the Glib-Dumbs will be abandoned by many of their voters and FPTP will help as well, so all is not lost by a long way – though obviously it would be wise to get rid of some of the problems sooner rather than later – first and foremost Ed Balls of course.
    OTH, if things start looking up for the Tories we can expect the gnats to do very well at Labour’s expense since FPTP will be working in their favour and also because the Scottish Glib-Dumbs will lose most of their sets to the Salmondistas – though Labour will pretty surely gain one Scottish Lib-Dem seat and the remaining Scottish Tory seat as well.

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