Could Labour win?

A nagging worry is keeping Labour MPs and ministers awake at night. It's not the expenses row – they've gone through the pain barrier on that already. It's not the prospect of a hung parliament and having to do a deal with the Liberal Democrats – they could live with that - or even the prospect of losing power altogether. No, the new spectre stalking Westminster is the possibility that Gordon Brown might actually win the general election in May.

The latest MORI/Ipsos poll in the Observer puts the Tories at only six points ahead of Labour for Westminster - not enough for David Cameron to form a government, for which he needs a minimum of 117 new MPs. One poll doesn't make a summer victory, but there's no doubt that things have been looking up for Labour recently. Only a year ago the Tories were ahead by 20%. Last month's Sunday Times/Yougov poll cut that lead to 11%. At a comparable moment before the 1997 general election, Tony Blair was consistently ahead by between 12% and 25%.


And it's not just opinion polls. Labour have been winning by-elections again, in a way John Major never did on the eve of the 1997 election. In the Glenrothes by-election, Labour astonished themselves by turning an expected loss to the SNP into a seven thousand vote victory. In Glasgow North East – one of their rottenest rotten broroughs – Labour won by a remarkable eight thousand majority with 60% of the vote. For the moment at least, David Cameron's momentum has stalled. The bookies are anxiously reviewing the odds.


Now, this Labour turnaround, if such it is, could be most inconvenient. An air of benign defeatism has hung over the government benches in Westminster for most of the last year. Many Labour MPs are standing down to spend more time with their expenses-financed property portfolios. A number of Labour ministers past and present have lined up nice little jobs in the City. Now they face having to return to the Westminster grind, and with no second homes allowance. Another four years having to be nice about Gordon in public - the agony!.


Worse, Labour's apparent polling revival raises the leadership question yet again. Confident they were going to lose, Labour MPs had more or less stopped bothering about Brown's leadership. In fact, it was quite useful having a dud PM on which they could lay the blame for expected defeat. But now, if they're in with a chance, however remote, then it becomes the duty of Labour MPs, surely, to consider changing horses and installing Alan Johnson in post in the New Year. For, while the polls suggest the Labour government is recovering, Gordon Brown is as unpopular as ever.


So, how has all this happened? Well, voters are feeling more optimistic about the economy – that is confirmed in the latest poll. A year ago, everyone was talking about financial apocalypse and the possibility of another Great Depression. Now it appears that apocalypse has been averted and while many people are losing their jobs, those who still have them are doing rather well. Home owners with an average mortgage have had a windfall of several hundred pounds a month. The public sector, which employs a quarter of the work force in Scotland, has escaped spending cuts and many employees are getting pay increases instead of P45s..


People have money to spend and everyone's getting bored with austerity chic. It may all be funny money, but the British economy has been living a credit-fuelled fantasy for years, so why not a few months longer? Brown is on course to borrow £200 billion this year, or around 13% of GDP. Coupled with quantitative easing from the Bank of England, and give-aways like the car scrappage scheme and the cuts in stamp duty, this amounts to an irresponsible and even reckless handling of the national accounts. But hey! Who ever bothered about prudence – this is politics.


The Tories are may have the economics right – this continuation of the debt cycle cannot be be sustained – but they may have got the politics wrong. They fell into the spending trap laid by Gordon at his sneakiest. By throwing money around, he got George Osborne, the shadow chancellor, to start talking about swingeing cuts in government spending; freezing public sector pay and ending final salary pensions. At their conference, the Tories promised to take an axe to the state bureaucracies, getting rid of all those phoney equal opportunities team leaders and multicultural outreach co-ordinators. Yesterday, David Cameron said there would need to be an emergency budget to “cut the deficit”. His realism is commendable, but all this talk of austerity has started to frighten people. Women voters in particular are anxious about the Tory assault on the state since many of them are either working in it or relying on it help with child care and education. They liked Labour's promise of free social care in the Queen's Speech last week.


The government may be acting with transparent cynicism in buying the general election – but economic literacy has never been our strong point as a nation. The public's capacity for self-delusion is pretty unfathomable, even when they are being bribed with their own money. Gordon Brown may be taking us down Zimbabwe road, but as long as people can buy new cars and see house prices going up who needs a map?


Will this irrational exuberance last till polling day? My own view is that Labour is too far gone to recover in time for next May because the entire South of England has already made up its mind and wants a change. Gordon Brown is still immensely unpopular, even if his economic policies are not, and Labour certainly show no sign of getting rid of him. I suspect people will begin to realise before polling day that they're being sold a fantasy. If unemployment rises to near three million by next spring, Brown's goose will surely be cooked.


But what this poll blip tells us is that Labour MPs can no longer rely on losing the next general election. They can't just coast comfortably to defeat. They now have to decide whether or not to get up off their backs and make a fight of it. At the very least, go back to their constituencies and prepare for a hung parliament.