Labour has an opportunity to build upon One Nation themes to build a convincing economic message. However, we must also tackle the fact that we have more to do to build our economic credibility.

The state of the economy continues to be a worry for people. The latest Economist/Ipsos MORI poll records that 52 per cent are concerned about the economy and it is the largest single concern in the survey. YouGov’s polling on the economy is revealing. It records that 75 per cent of respondents believe the British economy is in a bad state. A majority (58 per cent) believe the coalition government is managing the economy badly. Most (60 per cent) believe government spending cuts are being carried out unfairly, and a higher proportion believe the cuts are too deep (42 per cent) and happening too quickly (45 per cent), compared to about right (28 per cent and 26 per cent respectively). However, a clear majority (59 per cent) believe they are necessary. The bad news for Labour is that 38 per cent believe it is most to blame for the cuts, compared to 26 per cent blaming the coalition. These figures have remained more or less constant for a year and a half, though they are better for Labour than immediately after the 2010 election. Nevertheless, the data indicate why opposing cuts has not been gaining the ground with the electorate we might have expected.

Labour still needs to improve its reputation for economic competence. An ICM poll in December recorded a slight recovery in the Conservatives’ reputation, with 35 per cent regarding the leadership as competent. Labour scores 24 per cent, the lowest for a year. This picture was seen in other polls – a Populus poll in October recorded that 42 per cent trusted coalition economic management versus 27 per cent for Labour, while Ipsos MORI polling has put the Conservatives just ahead of Labour on which party has the best policies on the economy. Labour activists will report that our reception on the doorstep is similar.

Before we get too depressed it is worth noting that the picture is not particularly great from the coalition’s perspective either. In general, the polling is not convincing for the government. It has yet to persuade people it is cutting the deficit in the right way and in a manner which is fair. Labour is, to some extent, an unknown quantity. Blamed (unfairly we might argue, but there we are) for the large deficits and necessary cuts, it has had a change of leader and is still outlining its policy platform for the next election. The Conservatives remain vulnerable on the economy as Labour firms up its thinking into a positive message.

However, we cannot rely on time, continued Tory incompetence, and slow economic growth to get us through. Our opinion poll lead will remain fragile until we improve our economic credibility. At the moment, we criticise the government for missing its deficit-cutting targets, while saying we would deliberately miss them if we were in power, because we would cut slower and less deeply. Our reasoning is that cutting spending more slowly will help promote growth, which in turn will help cut the deficit through higher tax revenues at a later date. This is a reasonable position to hold, especially since the coalition’s alternative strategy has failed, but it is not always easy to communicate.

It also runs against the prevailing view that we are not particularly good at controlling spending. That is presumably why, despite the financial crisis, many people still blame us for the spending cuts we are now experiencing. The later years of Labour government gave that impression despite a spending review which limited spending growth. Our reluctance to talk about future cuts undermined our credibility. Combined with declining living standards, this gave the impression of limited returns for hard-earned taxes. At the moment we can come across as being in a no-man’s land, where we have apologised for too high a deficit prior to the financial crisis (it seems small now in comparison with what came later but our commitment to cut it was questioned) though avoid talking about it, and yet feel it is too early to talk about specific spending cuts.

There are no easy solutions. The scale of the economic problems facing us is enormous and we have a government with a failed policy and hoping for the best. Labour needs to build more credibility on spending to make progress with the electorate. Meanwhile, the One Nation theme can be developed to provide an important counter to the coalition’s economic policies.

This article was first published by Progress on 30 January 2013.