Labour governments have come to power five times in the past century and three of those occasions have come in years that end in a four: 1924, 1964 and 1974. If Rishi Sunak does call an election during the course of 2024, history suggests he will lose.
But not by all that much. In 1924, Ramsay MacDonald formed a minority government after the December 1923 election. Harold Wilson scraped home with a slender overall majority in October 1964 and returned to Downing Street after the inconclusive result in February 1974.
Looking at the state of opinion polls, a similar outcome in 2024 – assuming that’s when the election is called – would be considered a good result for Sunak. Polls suggest the Conservative party is facing a defeat to match that suffered by John Major in 1997.
Conversely, a hung parliament or a slender overall majority would now be something of a disappointment for Keir Starmer, even if that would not have been the case when he became opposition leader in early 2020. Labour has held a consistent and commanding poll lead since Liz Truss’s short-lived premiership.
Sunak remains hopeful that an improving economy will boost the Conservatives’ fortunes, as it nearly did in the 1964 election, a contest that turned out to be a lot closer than the polls had been suggesting a year previously when, in the aftermath of the scandal involving Sir John Profumo and Christine Keeler, Harold Macmillan was replaced as prime minister by Sir Alec Douglas-Home.
Wilson presented himself to voters as the change candidate, contrasting his party’s embrace of modernity with a Tory party that had run out of ideas after being in power for 13 years, and that was led by a man more at home on the grouse moors than in a laboratory. It was a clever pitch, but it only just paid off.
One reason for that was that the economy was booming in the final year of the 1959-64 parliament, with real incomes rising and consumer spending strong. The feelgood factor came at a cost – growing inflationary pressure and a widening trade deficit – but the chancellor, Reggie Maudling, assumed that the malign side-effects of an overheating economy would only become apparent once the election was over. As proved to be the case.
Looking at today’s economy, the chances of a repeat of 1963-64 appear remote. As 2024 dawns, many words could be used to describe Britain but booming is not one of them. Growth in 1964 was 5.7%; in 2024, 1.7% would be considered a stupendous performance. Since the start of 2022, the economy has in effect moved sideways, and actually contracted slightly in the third quarter of 2023. A repeat of that in the final three months of the year would leave the UK technically in recession.
Nor does the government have nearly as much scope to conjure up a pre-election boom as was the case six decades ago. The Bank of England is now responsible for setting interest rates, while the forecasts for the public finances made by the Office for Budget Responsibility limit the chancellor’s freedom to slash taxes.
Last week’s announcement by Jeremy Hunt that he will present his budget on 6 March has intensified speculation that the Conservatives are planning a snap election in the spring. There is an argument for going early. Workers will start to see the impact of lower national insurance contributions this week, while the minimum wage goes up by almost 10% in April. Energy bills are set to come down by 14% in the same month, easing cost of living pressures.
Further, the recent sharper-than-expected fall in the annual inflation rate coupled with the drop in market interest rates provide Hunt with more leeway to cut taxes in the budget and still meet the government’s rules for managing the public finances.
Even so, there are plenty of weak spots in the government’s economic record for Labour to attack. As the Resolution Foundation thinktank pointed out last week, real pay adjusted for inflation will be lower than it was in 2006. What’s more, taxes are going up as well as coming down. That’s due to the previously announced six-year freezing of tax allowances and thresholds – the latest instalment of which will take place in April.
Sunak and Hunt do have a few things going for them. Real incomes are rising because wages are increasing faster than prices. Fears a year ago of a housing market crash have proved unfounded and the recent fall in long-term interest rates will boost activity and underpin prices.
The Bank of England, despite its hardline insistence that there is no chance of official interest rates being cut from 5.25% anytime soon, is likely to change tack over the coming months as inflation falls further towards its 2% target. The City expects the first quarter-point cut to come in May.
Set against that, about 1.5 million households will be coming off fixed-rate mortgage deals during 2024 and will only be able to re-fix at higher rates. Torsten Bell, the director of the Resolution Foundation, says that while the increases might not be as great as they looked likely to be a few months ago, the average household will still be paying £1,800 a year more. “I’d gently suggest they won’t feel like they’re ‘benefiting’ as their mortgage bill rises by hundreds of pounds a month,” Bell said.
And that’s the problem for Sunak and Hunt. They will be saying they have steadied the ship and that the economy is now on the up, but there is no real sign that voters believe them. That may change as the election gets closer but it doesn’t feel much like it.
