by Atul Hatwal

The Christmas break will have been a time for some self-congratulation in Labour leadership circles. A solid poll lead, a divided coalition and high hopes for the coming year.

Ed Miliband had a passage in his stump speech on the circuit of pre-Christmas Westminster receptions where he talked about the unprecedented position of strength Labour is in for a new opposition, with such a lead at this stage in the parliament. He is factually right, but then the competition for most effective new opposition is not terrific. In the past 33 years, there’s a choice of two: either William Hague’s Tories or Michael Foot’s Labour party.

And at this point in Mrs.Thatcher’s first term, two and a half years after the election, even Michael Foot managed an average lead over the Tories of 3% (averaging the four polls in November 1981 – h/t Mark Pack and his magnificent polling spreadsheet).

When considering unprecedented political phenomena, Ed Miliband, and indeed Ed Balls, might want think more carefully about where the party stands with voters on economic competence.

Decades of polling gives a very clear message: no opposition has won an election without a commanding lead on the economy.

In 1979, voters preferred Jim Callaghan to Margaret Thatcher as PM by 50% to 31%, but still elected the Tories who led on economic issues by an average margin of 10%. In 1997, Labour led by 10% on the economy at the election, while in 2010 the Tories led by 8%.

Currently. Labour is 11% behind on economic competence and no opposition has gone on to win the next election when trailing the government on the economy, after two and half years.

Typically, there just isn’t the time left in the parliament to overhaul the government lead and build a sufficient cushion prior to the inevitable narrowing of the polls as election day draws near. Based on the polling facts, a Labour victory in 2015, from this position, would truly be unprecedented.

Looking at the detail of the fall and rise of the Tories’ lead through 2012 highlights just how difficult it will be for Labour to rewrite the rule book in 2013 and build a sufficiently robust lead on the economy to win the next election.

George Osborne’s catastrophic budget presaged a drop in the Tory lead, as did the double dip into prolonged recession. Seven months of appalling economic news cost the Tories 13% but still left them 4% ahead of Labour.

That’s worth reflecting on for a moment – even after such an epic level of economic failure, the Tories were still more trusted on the economy.

Then, in the last two months of the year, the return of growth and the fall-out from the financial statement have added 7% onto the Tories lead. More than anything else, this end to 2012 should have set the red warning lights flashing at Labour HQ, for two reasons.

First, any return to sustained growth in 2013 will put the Tories out of sight on the economy. Even if there is a triple dip, the evidence of 2012 is that this costs the Tories 4-5% per quarter. Six months of recession would still leave the Tories narrowly ahead and currently few are predicting two consecutive quarters of a shrinking economy.

Based on 2012, even a flatlining, barely growing economy will help the Tories consolidate a double digit lead over Labour.

Second, the defining confrontation between Labour and Tories on welfare following the Autumn financial statement in December seems to have bolstered the Tory lead on the economy. The nuance of Labour’s message that the majority of the benefit cuts will hit those in work and hurt the economy is being lost. Instead, what appears to be getting through to the public is that Labour will increase welfare spending, which for a party that is deeply mistrusted on spending is lethal to rebuilding a reputation for economic competence.

For the party, it’s always much easier to focus on the positive news of the headline poll lead. To enthusiastically retweet the latest overnight poll advantage and go to bed happy. But sooner, rather than later, the difficult questions on Labour’s lack of headway on the economy will need to be addressed.

It’s not good enough to talk about a work in progress or slowly building the Labour case. We are now further behind the Tories on the economy than at the time of the last election, and that’s after all of the pain of the past two and a half years. Noone in any position of leadership within the party has proffered any type of explanation or plan to turn this deficit around, other than to keep on doing what has palpably failed since 2010.

Unless Labour’s leadership is suggesting that the party can defy political gravity and somehow win while deeply mistrusted on the economy, Labour’s current course seems a lot like Einstein’s reputed definition of insanity.

Without some active leadership and change in strategy, 2013 is going to be a long, tough year for the realist wing of the party.

Atul Hatwal is editor at Uncut

Tags: Atul Hatwal, economic competence, economy, Ed Balls, Ed Miliband, polls