Will Cameron soon be the leader under pressure?

As Labour opens up an 8-point lead over the Tories, the narrative could soon change.

It may just be one poll, but this morning's ComRes/Independent survey putting Labour 8 points ahead of the Conservatives is a big boost for Ed Miliband. The poll puts Labour up 2 points to 42 per cent, with the Tories down 2 points to 34 per cent and the Lib Dems unchanged on 12 per cent.

The 8-point lead is the largest Labour has recorded since 2007 and the Tories haven't been as low as 34 per cent since May.

While support for the Lib Dems has plummeted since the general election (to as little as 7 per cent), support for the Tories has remained surprisingly robust, until now. With Labour also likely to triumph in the Oldham East and Saddleworth by-election on Thursday, Miliband will win some of the breathing space he needs.

Should the Conservatives either outperform or underperform expectations, Cameron will come under pressure. If the Tories do worse than expected in the by-election, he will be attacked for giving the Lib Dems a virtual free ride. If they do better than expected, he will be attacked for missing out on a seat the Tories could have won (they were just 2,413 votes behind Labour at the general election).

Yesterday I suggested that a little bit of populism on bankers' bonuses would do Ed Miliband no harm. Today we learn that the Conservatives fear as much. The Telegraph's Benedict Brogan writes:

Tory high command wories that if it goes soft on the banks the numbers will get worse. Those who have pressed the coalition and specifically the Chancellor to speak out against banker-bashing are told each time that the coalition has to keep public attitudes in mind. Mr Osborne believes voters loathe the banks and blame them for the financial crisis.

Despite his status as one of the least electorally successful Tory prime ministers in history, Cameron has come under little pressure since the election. Instead, it is Nick Clegg and Ed Miliband who have attracted the greatest media criticism. But if, as seems likely, the Conservatives enter a period of sustained unpopularity, the narrative could soon change.

George Eaton is political editor of the New Statesman.

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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.