Labour could be handing the government the economic debate by default

Two news stories this week again highlighted the critical issue of the cost of living, which Ed Miliband made the centrepiece of his conference speech, and which Labour has been pushing ever since its leaders worked out that a genuine economic recovery was underway.

The first was the round of energy price hikes, which may or may not be partially related to that very speech – there was plenty of speculation that energy firms would seek to insulate themselves from possible wholesale market cost rises by raising prices in advance (not that it’s easy for any government spokesman to say so, as that line implies the energy companies believing Labour has a strong chance of forming the next government).

The other was the release of the inflation and earnings figures for September, where RPI inflation continued to outstrip average earnings, as it has done for some time now.  There is a flip side to that equation, which is that given reasonably strong growth and no other exceptional factors, you’d expect to see an improving employment picture, which is indeed the case.  Not that it necessarily feels like that.

And therein lies the political problem for the government: the big picture might be looking a good deal more rosy than it did this time last year but people don’t feel better off – because they aren’t.

Nor is there a great deal the government can do to change that situation, or not without undermining the message with which it’s been justifying the need for its austerity programme for the last three years.  There are some costs which could be done away with – as the SNP suggested yesterday, on green energy surcharges for example – but not without a backlash from those who support them, including those on the government benches.

So if there’s not much that can be done to deliver an instant feel-good effect, the debate will instead centre on who’s to blame for the lack of one, while the various parties seek to feel (or at least, voice) the pain of the electorate.  Ed Miliband did that very effectively when he took on the energy companies, despite being responsible for a part of those increased costs (proving once again the short memory and low awareness of many voters), though it’s not led to a lasting shift in the polls.

Perhaps one reason why not is that while Ed Miliband leads David Cameron in terms of being seen as in touch with ordinary people (though the great majority don’t see either of them as such), the polls have been moving slowly but steadily in the government’s direction on the economic questions in YouGov’s regular trackers:

• The balance on whether the government is handling the economy well or badly has risen to around -13 in the last three polls, up from about -30 mid-year and as low as -43 last year.
• A majority in the last three polls also believe the way the government is cutting spending is good for the economy; last summer, there was a regular 20+ point majority opinion against that view.
• Those who think the cuts are being done unfairly still outnumber those inclined to the ‘fair’ option by about 22% but that’s only half what it was eighteen months ago.
• Double-digit majorities in each of the last four polls blamed the last Labour government over the current Con-LD one for the cuts; for eight straight months last year, that gap stayed consistently in a range between 5 and 10 per cent.  The most recent in the series (October 13-14), put it at 15% – the highest since January 2012.

The figures across the board tell the same story, and Labour’s decision to move on from the economy in general to the cost of living is perhaps both cause and effect of that trend.  Will concentrating instead on people’s pay packets trump the big picture when most agree that the cuts are necessary?  No-one ever said the electorate were consistent in their demands or analysis and politics is invariably local, so it is possible.

One final thought: as Mike has regularly pointed out, the biggest swing since the 2010 election was from Lib Dem to Labour.  The Lib Dems justified their decision to enter coalition with the Tories on two principal grounds: that the Conservatives had the better mandate, and that a Blue-Yellow coalition had the best chance of fixing the economy.  If the country is increasingly coming to the view that they’re succeeding in doing so, how much of that will rub off on the Lib Dems, and how many of those switchers will come back to the fold in 2015?

David Herdson

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