Thursday, June 04, 2009

Labour is in a terrible hole and the economy will not help

Regardless of the council and Euro election results, we already know how things look for the parties generally.

The Conservatives are not doing as well as Labour was in the mid-1990s. However, Labour now doing even worse than the Conservatives were back then (nowadays the smaller parties are doing better, at the expense of the two biggies).

Danny Finkelstein and Andrew Cooper discussed the Brown vs Major comparison a couple of days ago, but didn’t do what’s necessary to get a decent answer: you have to control for accuracy against real election results.

(Here comes the maths bit; skip down to the graphs if you trust me.)

Opinion polling methodologies vary between pollsters and over time. The only company getting credible results in the mid-90s was ICM: the several polls it conducted during the 1997 election campaign gave an average Labour lead of 13.6%; in the end, Labour led by 12.8%. So subtracting the 0.8% difference from ICM polls conducted in the years before the election should give a decent estimate of Labour’s implied lead across the mid-90s (using data from UK Polling Report).

For current polls, I suggest a similar adjustment based on the accuracy of polls conducted during the 2005 election campaign. As Mike Smithson reports, the only pollsters who’ve kept their methods constant since then are ICM, YouGov and Populus.

The 2005 result was Labour 2.9% ahead of the Tories. ICM’s campaign polls averaged a 6.5% Labour lead (3.6% too high), YouGov had 2.9% (spot on) and Populus had 8.5% (5.6% too high).

Also, to smooth out the short-term blips and rogue polls, I’ve taken averages over three-month periods.

Here’s Labour’s implied lead through the mid-1990s:

And here’s the Tory implied lead in recent years:

(For 2009 Q2 I have, for obvious reasons, had to settle for April and May.)

Clearly, things have been more volatile lately than in 1994-97. A steady Tory advance was reversed by Brown’s becoming PM, but everything went very wrong very quickly for him, and in the last year or more the Tory lead has been in early Blair territory (Labour’s short-lived semi-recovery towards the end of 2008 was over-hyped).

I need hardly say that this kind of hole will be very, very hard to get out of – if it’s even possible at all.

One argument is that Labour’s position will improve as the economy does. I’m not convinced.

After two terrible quarters, it’s starting to look (touch wood) as if the worst of the recession has passed. I find it wholly plausible that growth will return by the start of next year. However, I think the most politically and psychologically potent economic number is not GDP but unemployment. And, as a lagging indicator, unemployment seems likely to keep rising through most of 2010.

Labour will not get much credit for an initially jobless recovery. If there were another three years until the general election, this strategy might be a goer, but there just isn’t the time.

John Major complained of presiding over a ‘voteless recovery’, but his situation was different. Unemployment had indeed been falling for almost four years before the 1997 election. But the key thing was that the Tories had lost the ability to claim credit. Their political strategy for handling the early 90s recession was that it was “a price well worth paying” for controlling inflation, and that “if it isn’t hurting, it isn’t working”. They claimed ownership of it, effectively saying that they were screwing us over for our own good – but then, on Black Wednesday, it turned out that they couldn’t even do that properly.

The recovery only really took off because their economic policy – high exchange rate, high interest rate – collapsed. They were never going to get any credit after that.

Brown’s situation is different. He gets a middling amount of blame now for letting the pre-credit-crunch situation build up, but most people do appreciate that this recession is worldwide. People also appreciate that he’s trying to boost the economy, even if they may not think that’s working much yet. Against this backdrop, he could perhaps eventually get credit for an improvement – but there isn’t time.

He also gets some credit for his handling of the more urgent aspects of the crisis. Labour got a moderate poll boost after the worst of the financial carnage last autumn, and the bailing out of the banking system. But that’s been and gone now. Panic has given way to gloom, and Brown looks far less good in that light.

The nearest Brown’s got to economic crisis management this year was the G20 summit at the start of April. An ICM poll just afterwards found that 20% thought he’d handled it very well, 50% quite well, 11% quite badly and 5% very badly. Encouraging stuff. But the same poll also found that this made no difference to the voting intentions of 72% of people; 11% were more likely to vote Labour as a result and 13% less likely.

Then, later in April, there was the Budget. Populus ran three polls asking whether Brown and Darling or Cameron and Osborne were better able to manage the economy properly. The weekend before, the Tories led by 45% to 35%. On the evening of the Budget, Labour led by 38% to 35%. The week after, the Tories led again, by 42% to just 26%.

These things have a very short-term impact and do little to change the underlying situation. Part of that situation can be seen in my final graph – YouGov’s figures for which party would run the economy best:

Labour had a decent brief surge late last year, as ‘run the economy well’ became pretty much synonymous with ‘handle the immediate financial crisis’, but since then the story has been bad. The Tory ratings seem solid.

Labour needs something big, and the economy will not be it.

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