Don't be fooled by the economic recovery, the odds are still against a Tory win in 2015

The challenges facing the Conservatives are mostly structural and may be impossible to overcome.

The extraordinarily rapid recovery of Labour's popularity following its poor share of the vote in 2010 (29% - a 25-year low) should not be construed as evidence of Ed Miliband’s irresistible charisma. It was simply the inevitable consequence of the entry of the Liberal Democrats into coalition with the Conservatives, which left the left wing of the electorate with nowhere to go but Labour. Other parties used to carp that the Liberal Democrats stock in trade was appearing all things to all voters, thus enabling them to pick up the disillusioned voters of both the Conservatives and Labour. Not anymore. Polls indicate that the Lib Dems will lose about half of the 22% they managed to win at the last election, with most of it going to Labour.

But whilst the left has been united, the right has splintered. UKIP’s rise to national prominence has seen it take votes from all parties but most of all from the Conservatives (polls indicate that around 60% of UKIP supporters voted Conservative in 2010). Nigel Farage's party looks likely to do particularly well at the European elections in May 2014 (it always punches above its weight in the Europeans) and will likely reach the apex of its popularity just 12 months before the general election.

Some of this support is likely to ebb ahead of the 2015 election, particularly as it becomes clear to voters that a high UKIP vote will make a Miliband premiership more likely. But it is a near certainty that UKIP will build significantly on the 3% it polled in 2010, and that this will come largely at the Conservatives’ expense. Neither is the oft-mooted suggestion of an electoral pact between the Conservatives and UKIP likely to prove a neat solution either. Personal antipathy between David Cameron and Farage makes a full-scale pact nigh impossible, but there have been suggestions that the party could make deals with individual eurosceptic Conservative MPs. Polling data suggest this would do little good, however. This is because a hypothetical pact with UKIP causes a full quarter of the Conservatives’ current supporters to jump ship, with 5% going to Labour.

This encapsulates the Conservatives’ catch-22 going into the next election: try to hold the 'centre ground' and they encourage voters on the right to switch to UKIP, but try to shift rightwards or form a pact with UKIP and they stand to lose many more moderates.

The Conservatives’ challenge is compounded by the enduring difficulty they have connecting with ethnic minority voters. Data from the Runnymede Trust indicates that just 16% of non-white voters plumped for the Conservatives at the 2010 election, whilst 68% voted Labour. Since the Conservatives’ last majority victory in 1992, the contribution of ethnic minorities to the UK population has roughly doubled from 7% to 14% (figures from the 1991 and 2011 censuses for England and Wales). If the party cannot rein in Labour’s advantage then it may well find that demographics have moved decisively against it.

So could David Cameron’s personal popularity and campaigning abilities shoot Ed Miliband’s fox? Since the dust settled on the Labour leadership contest back in 2010, the Conservative Party has been smiling inwardly (and indeed outwardly) at Labour’s folly in plumping for 'Awkward Ed' Miliband over his brother, 'Dashing David'. There are two reasons why this is likely to prove a false comfort.

First, Britain’s is not a presidential system. Cameron is certainly more popular than Miliband – 37% say he would make the best Prime Minister versus 23% for Miliband. Yet history shows that success on this measure is not a guarantee of victory. Margaret Thatcher trailed Jim Callaghan by nearly 20% on the same question in 1979 and yet won a comfortable majority. John Major and Ted Heath were hardly barrels of charisma either. Second, Cameron is nowhere near as popular now as he was at the last election. His current net approval is -11%, at the last election it was +33%.

Labour strategists fret that their poll lead is 'soft'. Yet even their worst recent poll, an outlier which showed the Labour lead at just one point, would give the party a majority of four seats. The Conservatives by contrast could not win a majority even with a lead of 7% in 2010. With the economy improving, the likelihood is that the next election will be close in terms of national vote share, yet the obstacles in the way of the Conservatives even remaining the biggest party are so great, and the hurdle for Labour becoming the biggest party so low, that the distribution of seats looks likely to fall decisively in Labour’s favour. 

David Cameron with Ed Miliband as they stand in Westminster Hall ahead of an address by Myanmar opposition leader Aung San Suu Kyi on June 21, 2012 . Photograph: Getty Images.

Richard Mylles is a political analyst at Absolute Strategy Research, an independent consultancy based in London.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.