by Jonathan Todd
Conservative Home recently highlighted an analysis by YouGov that shows a shortening of Labour’s lead over the Conservatives.
In parallel, the economy has continued its improvement. It grew by 0.8% in the third quarter of this year, building upon 0.7% in the second quarter and 0.4% in the first quarter.
Are the two connected? Logic would suggest so.
The trend identified by YouGov reminded me of one that I have spotted myself in one of the trackers that they run.
Roughly once a week YouGov ask voters whether they think the British economy is doing good, bad or neither. Until 25 July, never more than 10% of the electorate answered good in 2013. Since then, never less than 10% have done.
I resolved to bring some econometrics to Uncut to look more deeply into this.
I put together two time series over 2013: one on the Conservatives lead over Labour, which was my dependent variable, and another on the proportion of the electorate who think the economy is doing well, which was my independent variable. When the dependent was regressed on the independent, the co-efficient on the independent variable was just under 0.6. The p-test indicated that the regression was accurate with more than 99% certainty.
This is telling us that for every 1% increase in the proportion of the electorate that think the economy is doing well, there should be a 0.6% increase in the Conservatives lead over Labour.
Over October, according to the YouGov tracker, Labour’s poll lead over the Conservatives has averaged just under 5%.
Our regression indicates that the Conservatives require around a 9% increase in the proportion of the electorate describing the economy as doing well for them to retake a polling lead over Labour.
As we’ve seen a 6% increase in the proportion of the electorate reporting the economy as doing well since July, a further 9% increase in this proportion may not be infeasible over the next 6 months or so.
14% of the electorate currently describe the economy as doing well, so a further 9% would take us to around a quarter of the electorate being of this view. Is this possible? If it is, and the relationship that our regression establishes between improving economic sentiment and growing Tory support holds, then we are looking at the Tories being ahead in the polls within the next 6 months or so.
Tom Watson is, of course, right when he notes: “I don’t see optimism on the faces of the people I represent in West Bromwich, that’s for sure”.
The 9% increase in economic optimism that the Tories need to take a lead in the polls won’t come from his constituents. Or elsewhere in the swathes of the country ill-served by a government doing little to lay the foundations for sustainable growth and robust rebalancing.
But maybe this 9% can be found amid the home owners who feel wealthier as Help to Buy stokes a housing bubble. Or amid the Royal Mail shareholders, experiencing a quick return on their investment. Or shareholders in RBS and Lloyds who may be granted a similar return by privatisations in advance of the election.
Help to Buy revisits exactly the problems that led to the 2008 crash. The Royal Mail was sold for £6bn less than the government was told it was worth. The public stakes in the banks have not been used to recast the financial sector as one to make the most of Britain’s economic potential.
None of this makes any sense from the perspective of what is best for most of the British people. But that won’t stop the Tories being ahead in the polls if they can convince a quarter of the electorate that the economy is doing well.
From this perspective, Help to Buy and botched privatisations of Royal Mail and the banks are not evidence of a failure to learn any lessons from 2008, but evil genius.
The Labour slogan rings true: the Tories are for the few (the extra 9% of economically content voters that they are seeking by any means necessary) and we are for the many (the interests of the country as a whole). Pointing to the division and injustice inherent in this Tory strategy may not enough for Labour, though.
We may need to reach out to the few, as well as the many, and convince them that they’d be better off with Labour. That way the relationship that has held over 2013 between improving economic sentiment and growing Tory support will break down. And with it the Tory strategy for victory.
The harsh truth is that depression in West Bromwich is compatible with Tory victory if enough people in places like Watford feel good about the economy. If we want to change West Bromwich, we need to convince Watford that Labour will better serve them.
Jonathan Todd is Labour Uncut’s economic columnist