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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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.