The dominant narrative around a government’s record is more important than the facts, writes Paul Ormerod
Since the election in July, Starmers have been the stock to short. In the middle of that month, the Prime Minister had a net approval rating of plus 19 per cent. It is now minus 26 per cent, a huge 45 point turnround.
But as with all stocks, past performance is not necessarily a guide to the future. In terms of medium to long-term planning, a Labour government in 2029 certainly cannot be written off.
True, the Labour Party itself has been performing badly in council by-elections, losing seats to the Conservatives and, last week, to the SNP. This is very unusual so early in the life of a government.
But current polls can be a very poor guide to the outcome of elections held several years in the future. The electorate has certainly become more volatile in recent years. But even in what to many voters now seems like ancient history, opinions were subject to large shifts.
For example in 1959 the Tories won with a majority of 100. A year later, polls were still giving them double-digit leads. The media was full of articles proclaiming that Labour could never win again. The then-leader, Hugh Gaitskell, even contemplated changing the name of the party. But Labour went on to win, albeit narrowly, the 1964 election.
By 1968, though, Labour was massively unpopular. Yet by the early spring of 1970 the party had regained the lead in opinion polls. This prompted the then leader and prime minister Harold Wilson to call a general election in June. Labour lost.
In 1987 Margaret Thatcher won a landslide majority. In early 1989, the Conservatives still held a poll lead of some 10 percentage points.
This collapsed dramatically. By the spring of 1990 Labour led by incredible margins of over 20 per cent. But the April 1992 election saw the Conservatives squeak back with a small majority.
It’s the story that matters
The performance of the government is the key factor. Yet it is not so much the performance measured on objective grounds, but on how it is perceived.
The dominant narrative around a government’s record is more important than the facts.
The Major government of 1992-97 provides a clear example. The actual economic record is arguably the most successful five-year period in Britain’s post-war economic history.
The economy boomed, unemployment fell and at the same time inflation was brought under control for the first time in 20 years. At the beginning of the 1990s it was still seven per cent. By the middle of the decade, it was just two per cent.
But the Conservatives never recovered from the damage to their reputation for competence caused by the ejection of sterling from the Exchange Rate Mechanism, the precursor to the euro, in the autumn of 1992. It was actually the driving factor of the economic boom, but it was perceived as being a disaster.
The risk for Labour is of course that the current prominence of stories about sleaze, hypocrisy and cronyism stick and become the defining image of the government in the same way so-called Black Monday in 1992 defined the Conservatives.
Starmer performed a valuable task for Labour as leader of the opposition. He focused on the boring, backroom work of clearing out the influence of Corbynism, to give Labour a credible image.
The Tories can learn from this. The main task of whoever becomes leader is not to make dramatic policy announcements, but to erase the negative image of the Conservatives which is still widely held.
Paul Ormerod is an economist at Volterra Partners LLP