by Jonathan Todd
Last October, Uncut ran a regression on economic sentiment and Labour’s poll lead. This indicated that the Conservatives would start to overhaul Labour in the polls when a quarter of the electorate feel that the economy is “doing well”.
The last two times YouGov asked people whether they think the economy is doing well on 1/2 May and 8/9 May, 24% of them indicated that they think it is. By Monday evening, 12 May, the Guardian was reporting two polls that showed the Tories ahead of Labour.
It could be that between the last YouGov tracker on economic sentiment and the polls reported by the Guardian an extra 1% of the electorate decided that the economy is doing well. It might be that Uncut got something wrong with our regression or our interpretation of it.
But 24% is pretty darn close to 25% in most people’s books. So, while Labour’s slipping lead may have produced surprise in some quarters, what has happened is virtually exactly what Uncut postulated would happen.
The economy is improving. Voters can see this and are rewarding the Conservatives. This has happened sufficiently to give them a poll lead. While this should be placed in political context, Labour would be foolhardy to not recognise the direction of travel and recalibrate accordingly.
The political context is that in both polls in which the Tories led, they were only polling just above a third of the electorate, well below the 40% that they may well need to win an overall majority. Given the economic headwinds now blowing in the Tories favour, this should, however, be scant consolation for Labour.
We just had the biggest rise in employment in 40 years. The British Chamber of Commerce reports record business confidence. This is reflected in growth in the Markit/CIPS services purchasing managers’ index (PMI) from 57.6 in March to 58.7 in April, well above the 50 threshold for growth. And this might, in turn, be taken as emerging evidence to support the Oxford Economics expectation that GDP growth will continue, sustained by rising exports and business investment.
The impacts of the financial crisis were, of course, profound. It imperiled household finances and greatly inhibited business activity, which undermined the UK’s tax collection and fiscal position. It even threatened the survival of the Euro. We haven’t learned all the lessons that we should have done. But we are half a decade on.
The Euro is becalmed, supporting UK exports. Cardiac arrest in the City is receding to memory and positive economic news is the more immediate reality, which encourages businesses to make investments that may have seemed too risky for a number of years. Given all of this, it seems likely that economic sentiment will keep ticking upward beyond 24%, potentially further damaging Labour’s poll position – at least on an unchanged strategy.
Hopi Sen is right that “we should reject the inevitability of victory or defeat” for Labour. And, in the same article, he establishes five very sensible tests for how Labour is performing over the next year. But these tests miss the bigger point about the economy and what it means for politics.
It is change in the economy that, according to the regression analysis put forward by Uncut, has driven change in politics. These economic changes appear likely to continue. The seizing of poll leads by the Tories – at almost precisely the moment Uncut predicted this would happen – suggests that this economic good news will continue to improve the Tory position.
Labour has two options. Continue as we are: emphasising issues – e.g. the bedroom tax, food banks, payday loans – that speak to manifest unfairness. But which are removed from the lives of many voters and which seem out of tune with the UK’s building economic optimism. And engage in populism that risks division and Labour appearing vengeful – thus, being equally off-key in a more optimism context.
The alternative is that Labour becomes the optimists. The industry of the people and the entrepreneurship of business have got Britain off its knees. Just imagine what they could achieve with Labour backing them all the way: unashamedly pro-business – not setting “producers” against “predators” or big businesses against small, but wholeheartedly backing all those that create jobs, wealth and tax collections.
Ed Miliband has been right to stress that Britain can do better. Equally, Jon Cruddas has been that Britain must be rebuilt. This better, rebuilt Britain does depend on Labour. But angry finger-pointing is not the way for Labour to return to government, particularly in our improving economy, or to behave if we get there. Rather than judgmental diktat, the economic context reinforces the importance of a hopeful politics, grounded in confidence in the capacities of British business and workers.
My test for Labour is that we reverse the trajectory that we are now on: That the Tories will fight May 2015 as the optimists and Labour as the pessimists. This is entirely the wrong way round. But changing this and the interaction between economics and politics that has seen the Tories recover poll leads requires that Labour seize the optimistic alternative.
Jonathan Todd is Deputy Editor of Labour Uncut