Tory momentum stalls in the marginals that matter

Cameron's lead down to 2 points, personal ratings tank.

Eighteen months ago, someone at Channel 4 News made a smart call. It was autumn 2008 and the programme's makers were keen to discover whether Gordon Brown's role in "saving" the banks would ultimately save his premiership. But rather than test the mood of the country as a whole, the show set about polling in marginal constituencies.

And not just any marginals. The seats where David Cameron's Conservatives only needed to overturn a lead of a few hundred were irrelevant -- Cameron had those in the bag long ago. Rather, YouGov was asked to look at seats where Labour had majorities of roughly 2,000 to 7,000 votes, the very seats the Tories have to win if they want an overall majority.

In other words, these are the marginals that matter.

This week, YouGov returned to those 60 Labour-Conservative constituencies and last night Channel 4 News broke the bad news to Cameron and co -- the Tory lead over Labour is just 2 points, translating to a Conservative government 11 short of a majority. This is hung parliament territory.

The figures themselves are not disastrous for the Conservatives but the trend is worrying, suggesting a loss of that electoral magic formula: momentum.

Back in October 2008, despite the bailout bounce Brown was enjoying elsewhere, the Tories had a commanding 13 per cent lead in these 60 seats. Moreover, Cameron's personal ratings comfortably trumped Brown's. Not any more. For example, 70 per cent now think that David Cameron in No 10 would mean either change for the worse or no change.

The Michael Ashcroft millions, targeted at just this kind of seat, may yet start to work, but as YouGov's president, Peter Kellner, notes:

If Mr Cameron can't turn that round, and if the general election results are exactly in line with our poll, then the Tory leader would unquestionably become prime minister, but he may need to call an early second election to seek a clearer mandate from Britain's voters.

And if he continues to lose momentum in these seats, things could be even worse. As it says on this week's New Statesman cover: "Game on".

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Jon Bernstein, former deputy editor of New Statesman, is a digital strategist and editor. He tweets @Jon_Bernstein. 

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR