Having predicted difficult years ahead for the Conservatives and Liberal Democrats, almost by default I’m going to have to predict good things for Labour. In terms of voting intention polls and electoral victories they should have a good year, what matters is what they choose to do with the opportunity, to use a well worn metaphor from the past year, will they fix the roof while the sun shines?

Since the election Labour have risen from 30% to around about 40% in the polls, the majority of this increase being at the expense of the collapsing Liberal Democrat vote (there is a small amount of churn between Labour and the Conservatives, but no great shift. The overwhelming majority of people who voted Tory in 2010 would vote Tory again tomorrow).

This means that Labour are narrowly ahead in all the polls just seven months after losing the election, and it will probably get even better next year. The cuts will start to come into play with all the consequential stories of this or that bad thing being attributed to them, further sapping government support. Barring an upset in Oldham, 2011 should be a year of electoral victories for Labour. The polls in Wales suggest a very strong Labour performance there, with the party on the edge of an overall majority. Scottish polling is less regular, but they too suggest a good result for Labour. They should also make good progress in the local elections. All of this suggests Labour should enjoy some healthy leads in national voting intention polls and the way the vote was distributed in the UK at the last election, that should translate into an easy Labour majority if repeated at an election….

But, there probably won’t be an election next year. Labour’s strategy can’t afford to be based upon the assumption that the government will fall early, that the economy will still be up the spout come 2015, nor that the spending cuts will automatically bring public services to the point of total breakdown rather than being adapted to over time (of course, things could end up in utter disaster, but in that case Labour will probably win anyway regardless of what they do).

Being ahead in the polls gives a lot of advantages. The party appears on the up, people take you seriously, and it gives the leader a certain authority to act and take the party with him. Labour need to utilise this time to tackle their underlying problems so they are ready for the next election.

At present Ed Miliband’s authority in the party is uncertain because the majority of Labour’s MPs and members voted for a different leader, who was also perceived as the better leader by the public. Miliband’s current ratings in the polls are lacklustre – he already has a negative approval rating, his brother is still seen as a better option and only 27% of the public think he’s up to the job.

The worst case scenario for Labour is that Ed Miliband is their IDS – little bit awkward looking, vocal mannerism that makes it hard to take him seriously, has the right ideas about reforming the party, but fatally underminded by the fact his MPs never actually wanted him in the first place and never felt any loyalty to him.

I’m inclined to withhold judgement on Miliband so far – he hasn’t made an impression with the public, but that also means he hasn’t made a negative impression yet. Think of the rapid negative perceptions Hague built up immediately, or Michael Howard brought with him to the job. There’s still time for people to warm to Miliband – more importantly, after May 2011 he should have some victories under his belt and that will give him the aura of success. People will think more positively of him as a victor, and it should win him some loyalty amongst his MPs.

I wrote earlier in the year about the problems that resulted in Labour’s defeat in May. Gordon Brown himself had atrocious ratings, their economic record was shot and they were seen as old and tired and out of touch. Gordon Brown is a problem Labour don’t need to worry about of course, but solving the other problems is less easy and in some cases contradictory.

Building an economic reputation in opposition is nigh on impossible. We saw in my post on the Conservatives that 47% of people now think the government are handling the economy badly compared to 40% who think they are doing well. However, ask people if they trust Labour or the Conservatives on the economy and the Tories still come out top.

On this front Labour also need to worry about the narrative the coalition government build around them. In 1997 Labour successfully painted the narrative of Conservative years of boom and bust and chronic underfunding of public services. The Conservatives will want to paint their own narrative of the last Labour government, of reckless spending pushing the country to the verge of bankrupcy, and have had some success in doing so: 60% think Labour haven’t faced up to the damage they did to the economy, 47% that if Labour returned to government they’d put the country into even more debt. Labour can argue with that, try to put forward their case for the last goverment’s economic record…but that conflicts with trying to distance themselves from Gordon Brown and the last Labour government.

How Labour respond to the cuts may be the trickiest. There will be pressure upon Miliband to simply oppose all the cuts and reap the rewards of public unhappiness. This may be superfluous anyway, as the only main opposition party, Labour are going to benefit from public unhappiness at cuts whatever, but it would bring with it its own risks – it can be portrayed as Labour not having their own plan, running away from hard decisions and, worst of all, raises the question of what happens if the cuts work… if the economy comes back on track, and public services don’t collapse?

On one hand, Labour are in opposition and by the time of the next general election the deficit will probably have been addressed. It’s not the opposition’s job to govern, and there’s no point Miliband tying himself into an inevitably tricky policy on a problem that someone else has the unenviable task of solving. On the other hand, if they don’t put forward some sort of coherent stance they will firstly be mocked for it, but more importantly, the government will invent a stance for them. If Labour don’t define themselves, then come the next election the Conservatives will paint the choice as being “the party that took the hard but necessary decisions while Labour suggested nothing” or “the party that took the steps needed to bring the economy back to health, opposed at every step by Labour”. It would fall on fertile ground: if you look again at the YouGov trackers on party image, the Tories have an overwhelming lead (58% to 10%) on the perception that their “leaders are prepared to take tough and unpopular decisions.”

Then there is the fairness agenda, this is the Conservatives’ great weakness. As I wrote in the first of these pieces, polls show people increasingly think the cuts are unfair and many still see the Tories as a party that puts the rich and affluent first. That’s an open door that Labour can push at. However, in order to win Labour need to appeal to middle class and aspirational voters. YouGov polling in August found Labour was seen as being closest to trade unions, to benefit claimants and to immigrants, with comparatively few people seeing them as close to the middle classes or people in the South. In opposing the cuts Labour mustn’t allow themselves to become too closely associated with the benefit recipients losing out from cuts, or the trade unions striking against them (hence, of course, Ed Miliband’s focus on the “squeezed middle”)

Finally Labour have to make themselves seem renewed and relevant again. It will be easy for Labour to say what they are against, trickier to say what they are for.

The short term position for Labour is good, and will get even better next year. It may be that the economy sours and they have an easy ride back to power. If not though, they have an awful lot of hard work to do – Ed Miliband needs to ensure that the relative ease with which the party has re-established a lead in the poll doesn’t lead them to think that it’s in the bag. The good news for Labour is they have the luxury of being able to do all the work from the position of an opinion poll lead.


413 Responses to “End of year round up – Labour”

1 7 8 9
  1. @ Nick Hadley

    “They really don’t like this Coalition in the partisan Tory press, do they? Mail on Sunday making populist fun out of millionaire Tories on holiday and the Telegraph taking chunks out of Cable and the Lib Dems. Maybe we’re looking in the wrong direction for the real troublemakers and sworn enemies to Mr Cameron and Mr Clegg’s coalition project.”

    You raise an interesting point. I could see the Coalition failing if the 1922 Committee decided to try and get rid of Cameron. That would throw a big monkey wrench into things.

  2. Latest YouGov – 4th Jan CON 40%, LAB 42%, LD 8%; APP -19

  3. @JimJam – “… Osborne really is a vote drainer for the Tories.”

    Just had a quick gander at TellYouGov… scoll down some way and you get to the first positive comment – “Smirking again!” [?], scroll down further to the next positive comments and they appear to be some kind of dispute about the merits of tax avoidance.

  4. @ Anthony

    Yes, VAT has many rules & exceptions. I wanted to point out that some businesses charge VAT on second hand goods.

    In my over-active imagination, I pictured a UKPR poster having a ‘lively debate’ with a dealer about VAT not being applied to second-hand goods if they are ever charged VAT on something second-hand. ;-)

  5. @Jack

    “Wrong; I don’t have prejudices; I have clear logic; you have prejudices. I have freedom fighters, you have terrorists. Israel Govt has a capital city at Jerusalem; international law has it at Tel Aviv (Jerusalem under international is an international city); that’s one reason why Hamas view of not recognising (part of( Israel is correct-under international law much of what Israelis call Israel is not Israel, Those of us who belive in international law must therefore also ‘deny’ that much of what Israel calls israel exists. It’s actually occupied territory conquered by violence.”

    Is this meant to be ironic? If not, I’m not with you, I’m afraid. A truly baffling juxtaposition of an academic argument about prejudice with the Palestinian and Israeli conflict. The connection between the two in terms of the original argument is totally beyond me.

  6. @ Amber Star

    Is VAT basically a national sales tax? Or is it in addition to other taxes? And does it apply to services as well as goods? For example, does it apply to hotel stays? I remember an episode of Fawlty Towers (the worst one with the deaf woman) where a woman complains about how much she’s paying plus VAT.

  7. @ Nick Hadley

    “Is this meant to be ironic? If not, I’m not with you, I’m afraid. A truly baffling juxtaposition of an academic argument about prejudice with the Palestinian and Israeli conflict. The connection between the two in terms of the original argument is totally beyond me.”

    Bringing up the Israel/Palestine conflict is like a minefield in political discussions. It’s almost like Godwin’s law.

  8. I think what we need is a Labour Government when times are rough for the economy, and a Tory Government during booms. Spend when things are bad, save when things are good.

    Usually works out different. We get Governments spending before elections, even if they shouldn’t…and cutting stupidly because there won’t be an election for a while.

    If the Tories/Lib Dems invested in jobs now and then cut later in the cycle…they might surprise themselves and get elected again.

  9. @SocalLiberal

    “Are there any business entities in the UK that receive pass through taxation?
    Even though they’re regressive, sales tax increases always seem popular. I admit though I did once vote for something similar to a sales tax, a property parcel tax of $100 (I’m guessing that’s roughly 67 pounds) for each parcel of property owned in the county. It was regressive because it didn’t take into account the value or size of the parcel of land, it was just flat on everyone. It was voted down though.”

    I think the attraction of direct, sales related taxes to governments is that they are relatively easy to both impose and collect. There are some pretty sophisticated scams to avoid paying VAT or, in some cases, to fraudulently claim VAT rebates, but it is essentially a clearly understood and easy tax for the Exchequer to collect, unlike non PAYE income tax, capital gains and Corporation tax which are routinely and very successfully evaded. VAT, an EU initiated levy, replaced the old Purchase Tax that used to operate in the UK prior to 1973. Like VAT, it was a tax on sales, so it’s true to say that taxes of this nature have been around for some time. There’s a place for them in fiscal policy, but the routine raising of them, although tempting for governments, has inevitable regressive consequences.

    I agree with you about the Israel/Palestine conflict, by the way. A toxic subject for debate, particularly at this time of night and maybe Jack was just needing to get something off his chest!

  10. @ SoCaLiberal

    Yes, without going into all the ins & outs, VAT is broadly similar to a national sales tax.

    In the UK, retailers must include VAT in the ‘sticker’ price but show it separately on the receipt, bill or invoice they give the customer. Non-retail businesses are allowed to advertise/ quote ex-VAT prices & add it later. 8-)

  11. @ Amber Star

    I find it interesting that there is a requirement that sticker prices must include the price with VAT. If you’ve ever been to D.C., the sales tax there is 10%. California though has moved up to a 9.75% sales tax in recent years but the price of goods is never listed with the sales tax. It’s a good idea though.

    @ Nick Hadley

    “I think the attraction of direct, sales related taxes to governments is that they are relatively easy to both impose and collect. There are some pretty sophisticated scams to avoid paying VAT or, in some cases, to fraudulently claim VAT rebates, but it is essentially a clearly understood and easy tax for the Exchequer to collect, unlike non PAYE income tax, capital gains and Corporation tax which are routinely and very successfully evaded. VAT, an EU initiated levy, replaced the old Purchase Tax that used to operate in the UK prior to 1973. Like VAT, it was a tax on sales, so it’s true to say that taxes of this nature have been around for some time. There’s a place for them in fiscal policy, but the routine raising of them, although tempting for governments, has inevitable regressive consequences.”

    I agree with you. It punishes the lowest income earners but is easiest to enforce and often those who suffer the most from that type of taxation support it the most because they’re sold that it’s the “most fair system.” Is the VAT generally lower or higher than the old purchase tax? And is the VAT a requirement of EU membership? Also, is there VAT for goods purchased over the internet from abroad?

    I ask about pass through taxation because I know that income taxes in the UK are far higher than they are in the U.S. (and I would imagine even higher in Europe). Without a pass through mechanism, I would imagine a lot of business owners and corporate heads probably get double taxed.

  12. @SoCalLiberal,

    When you say “pass through”, I presume you mean the ability to avoid or claim back tax on the things your business purchases in order to produce its end product? If so, then yes that is exactly the arrangement we have. It is only the final good or service that a company offers that is subject to VAT. If they have paid VAT on anything used in the process they can legitimately claim that back from the government.

    Of course, as Nick says, there is a cottage industry in fraudulently claiming VAT rebates for things that in fact weren’t related in any way to producing the goods or services your company provides. I have railed against (and been slated for it) the fact that an awful lot of small businessmen in the UK are de facto criminals due to constant abuse of the VAT rebates, and other tax legislation. It’s not uncommon if you are in company with a small businessman and buy something in a shop for him to say “do you need that receipt, mate?”. He will then claim back the VAT on the digital radio, toolkit, ice cream or whatever you just bought.

    There is also a thing called “carousel fraud” which is a massive problem in the EU, particularly in the Mediterranean countries. I won’t bother you with the details as I realise I am straying further and further from the question!! (Personal bugbear time again..)

  13. @ Neil A

    Actually I meant something somewhat different. Pass through taxation occurs when business entities are not taxed and the income from those businesses passes through to those who own and/or operate the business entity for income tax purposes.

1 7 8 9