The latest polls show that the Conservatives are now losing their shine, following the Lib Dems down to unpopularity.
It is interesting that Labour are 10% ahead, when most people agree that Labour left the country in a dreadful financial mess. Most of the problems the Coalition are grappling with come from the inheritance.
It goes to show that opposition to government is not strengthening votes for parties on the side which wants spending cut and the deficit reduced faster. It’s good old Labour who are the main beneficiaries of the Coalition’s little local difficulties. For the purpose of this argument I accept the national opinion polls who do not forecast Respect taking off in other places. Labour agree that the deficit needs cutting, but disagree over the timing and magnitude of the adjustments.
So what has gone wrong?
The first problem must be inflation. As we discussed yesterday, the Bank’s failure to control price rises has led to a surge in domestic energy, fuel and other prices rises which have badly squeezed family budgets. This cut the purchasing power of family incomes.
The second is the way the government decided to direct the squeeze or the cuts to the private sector instead of the public sector for the first two years. Whilst people are not clamouring for spending cuts, they do not like the high tax strategy imposed to try to pay more of the public sector bills. Between the outgoing Labour government and the incoming Coalition government, we have seen rises in VAT, National Insurance, Income Tax above the standard rate, CGT, Stamp duty, petrol and diesel tax and others. The reaction to freezing the pensioner tax allowance is a symptom of the pent up frustration at ever rising taxes.
The third is the inability of the government to make decisions that UK voters want, owing to differing views from the ECHR or Brussels. Votes for prisoners, asylum rules, extradition and a host of other matters leave the government looking powerless when the public expect them to be able to tighten things up.
Mr Cameron experienced a surge of popularity when he announced his intention to veto the budgetary treaty. Many people would like him to follow that up with demands for a new relationship for the UK. Mr Osborne experienced a surge in popularity when in opposition he announced a tax cut and flat taxes. In government has has been unwilling to follow it up,as he has so much spending to pay for.
The Conservative leadership said they wanted to rebalance things – to grow the private sector and get the public sector to concentrate on the essentials. That was a good idea. Maybe they should do more to implement it soon. People are getting restless at the high taxes and the ever growing tentacles of EU and UK government. The private sector still needs more progress on tax, regulation and banking reform to be able to grow at faster rates.