Labour's shrinking poll lead increases party jitters

Having previously enjoyed a double-digit advantage over the Tories, the party's lead has been reduced to single figures, far below the level needed to be confident of victory.

It was the Tories, rather than their Labour counterparts, who left for the summer recess with their tails up, largely for the reasons set out by David Cameron in that final, triumphant PMQs. "The deficit is down, unemployment is falling, crime is down, welfare is capped, and Abu Qatada is back in Jordan." Alongside this, as Thursday's GDP figures will confirm, the economy is finally beginning to recover and the party is united in support for James Wharton's EU referendum bill. 

Recess is always a time when Labour jitters increase as MPs return to their constituencies to find few of the party's messages are resonating on the doorstep and Labour's shrinking poll lead won't help matters. For more than a year after George Osborne's "omnishambles" Budget, the party enjoyed a double-digit advantage over the Tories but today's YouGov poll puts its lead at just three points, the lowest level since March 2012. 

We'll have to wait and see whether it's an outlier but the trend is clearly downward. In the four previous YouGov polls, Labour has led by an average of just six points, a level far below that required to justify hopes of winning a majority in 2015. History shows that support for oppositions invariably slumps in the months before the general election as voters come to view it as a choice between competing alternatives, rather than a referendum on the government. It's for this reason that Labour officials privately speak of the party needing a lead of around 15 points to be confident of victory. 

As I've argued before, it's still more likely that Labour will be the largest party after the next election than the Conservatives. The electoral system continues to favour it (the party needs a lead of just 1% on a uniform swing to win a majority, while the Tories require one of seven); UKIP, which draws around 60% of its support from 2010 Tories, will continue to split the right-wing vote; most Lib Dem defectors are likely to remain loyal to Labour (they'll never forgive Clegg for his betrayals over spending cuts, tuition fees and the like); Labour's brand is strong even if Miliband's isn't (46% of voters say that they would "consider" voting for the party compared to 40% for the Tories) and the Lib Dem incumbency bonus will hurt the Tories (who are in second place in 37 of the Lib Dems' 57 seats) the most.

But it's now far from unthinkable that the Tories could remain the single largest party (which would require a lead of around three-four points) and reunite the coalition for a second term in government. All of which means that, once again, the pressure will be on Miliband to deliver "the speech of his life" come conference time. 

David Cameron and Ed Miliband walk through the Members' Lobby to listen to the Queen's Speech at the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.