1.6% inflation: is this the turning point for Tory election prospects?

Apr 15, 2014
The Mole

If wages are shown to be outstripping inflation, Labour's cost-of-living argument collapses

HAS the economy finally turned a corner that could give the Conservatives victory in the 2015 general election?

What senior Tories have been waiting for is figures showing wage rises outstripping inflation for the first time in six years: this would destroy Labour's argument that most voters are worse off under the coalition government and hopefully persuade the electorate that the long years of austerity have paid off.

This morning the first shoe dropped: latest figures, just released, show inflation in March fellto 1.6 per cent. Tomorrow the other shoes drops – and the expectation is that the figures eagerly awaited from the Office of National Statistics will show wage rises have gone up by as much as 1.8 per cent. 

David Cameron and George Osborne will be cock-a-hoop - while Labour will need to find a new tune to replace their cost-of-living refrain.

Until this morning, Cameron and Osborne had been deflated by the opinion polls showing the recent Budget fizz had fizzled out and that Labour had restored a strong lead over the Tories, between five and seven points, depending on your choice of pollster.

Ed Miliband, meanwhile, has continued to bang the cost-of-living drum, based on the assumption that most voters feel worse off –  to the tune of £1,600 - under the coalition government, because inflation has kept ahead of wage rises.

If wage have now crept ahead, then, as the Daily Mail argues, it means Labour’s entire election strategy will effectively become redundant.

Clearly confident that today's new inflation figure would support his argument, Osborne used a speech in the US at the weekend to crow that Labour were "wrong about the past and they are wrong about the future".

Osborne and Cameron have reason to be positive – but not to be complacent, says Peter Kellner, the head of YouGov, writing for The Guardian.

All the fundamentals are in Cameron’s favour, says Kellner: the economy is improving and voters are noticing. A year ago, 74 per cent said the economy was in a bad state; only four per cent said it was good. Today, just 43 per cent say bad, while 22 per cent say good. This time last year, the verdict on the coalition's handling of the economy was a terrible minus 35 (28 per cent said well, 63 per cent badly). Now, the gap has closed to just minus 6, with 42 per cent saying well, 48 per cent badly.

Although Cameron's personal rating has slipped in the past few days due to the Maria Miller expenses scandal, from minus 9 to minus 16, he is still ahead of where he was a year ago – and well ahead of both Ed Miliband (minus 26) and Nick Clegg (minus 51)

Cameron also leads Miliband head-to-head when people are asked who would make the best prime minister. YouGov’s latest figures put the Tory leader 16 points ahead, by 36 to 20 per cent.

"I can find no example of a party losing an election when it is ahead on both leadership and economic competence," writes Kellner. "If Britain's recovery is sustained (especially if living standards start to improve) and Cameron is able to maintain his lead over Miliband, we are likely to see a swing back from Labour to Conservative over the next 12 months – as we have every time in the past half century that a Tory prime minister has led his or her party into a general election."

So, with a year to go before the May 2105 general election, what can stop the Tories winning? Simple, says Kellner: the Tory party itself. 

Their expected drubbing in next month’s European Parliament elections by Ukip could lead to renewed infighting.

"If those Tory MPs who can't stand him – for personal or political reasons, or both – demand changes that Cameron can't or won't deliver, and undermine his leadership, then the Tories might go into next year's election badly divided.''

Watch this space.

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What you fail to appreciate is that wages have been decreasing in real terms for a number of years - it's going to take more than one month of a real term increase to eradicate this.

The premise of this article is based on an assumption that we will all be delirious with joy because of a one month 0.2% rise of wages over inflation. That is absurd. Most people won't even read those figures. They will be comparing their income with their outgoings over a much longer period of time, and unless there is a prolonged substantial improvement the whole premise of this article falls apart. I mean really - don't journalists have any common sense?

Peter - in reply to your question - NO!!!

I'm inclined to agree with you.

We find ourselves desperate for ANY good news - accordingly, when such a "green shoot" happens along, it is eagerly pounced upon as living proof that "the economy is recovering". Maybe it is, maybe it isn't - but with Cameron still in office at the next General Election (2015, by the way, not 2105!) then, despite the economic "recovery", this man is so deeply mistrusted that he will probably prove to be an enormous electoral liability to the Conservatives - people's memories last longer than the five years interval between General Elections.

We remember his mendacity and cynicism when giving a "cast iron guarantee" of a referendum on EU membership, should he come to power - we live with his expensive obduracy when it comes to spraying our hard-earned and sacrificed money at the Foreign Aid budget. In this age of austerity we have to live with the outcome of his obsession over gay marriage, we still await any moves on fox-hunting (like it or loathe it), we tremble at the prospect of where next he will despatch our non-existent armed forces, in order to poodle along with US foreign policy, we wait with increasing frustration and despair for him to do ANYTHING meaningful about repatriating any of our powers from the EU, we watch in horror the slow train crash that is his response to Scottish Independence - and the list goes on.

Why should Cameron expect ANYTHING but a trouncing at the 2015 General Election?

"The Mole" (along with most politicians) is being remarkably disingenuous here, and seemingly pretends to really not understand the concept of inflation. On behalf of the government, civil servants calculate typical purchases made by an average family... then watch to see how much the price of those items change over time. But it's long been understood that which items people purchase is largely dictated by how much money they have to spend. The items purchased each week by a family with a low income will differ markedly from the purchases of a more wealthy family. Generally speaking, FOOD has first claim on the poor family's income. Right now, food prices are rising MUCH faster than 1.6%.So, if you're poor, and spend a high proportion of your wages on food, then for YOU inflation is significantly higher than that of someone who's richer. It's reminiscent of the days when governments would boast of "increasing expenditure on the NHS by more than inflation". Let's run that one past again: the price of a basket of goods, including tins of baked beans has risen by 5%... the Government has increased expenditure on the NHS (most of which will have gone on staffing costs) by 6%... and is claiming that there's some kind of LINK between the ost to them of prescription drugs and NHS wages... and the price of baked beans? I just don't see the connection.

"don't journalists have any common sense?"

It depends on what you think their purpose is when they write this stuff.

Looks like click-fodder to me. An article designed to increase page hits, not to make sense...