Up until now Chancellor of the Exchequer, George Osborne, has been resolute in telling the public there is no plan B when it comes to the economy and that to change direction now could threaten the UK’s triple-A credit rating, despite calls for him to do more to encourage economic growth and create jobs from the opposition Labour party.
London and around 160 local councils will be holding elections on Thursday. In the capital it’s to elect the next mayor, with the two main candidates - the incumbent Conservative Boris Johnson and the man he beat in the 2008 election, Labour’s Ken Livingstone - in another close fight.
Usually local elections have little impact on national politics. Voter turnout is significantly lower than in national elections, running at around 30 percent; but occasionally such elections can have a significant impact.
In 2008 the Labour party, in government under the leadership of Gordon Brown, slumped into third place behind the Conservative party and the Liberal Democrats in the same set of local elections.
The result was seen as the electorate’s punishment for the way Labour handled the economy after first quarter gross domestic product data that year showed the UK had contracted in the wake of the financial crisis that was unfolding. It would not be until the following quarter that the UK officially entered recession but the damage appeared to have already been done.
The elections gave Labour a 24% share of the national vote compared to 44% for the Conservative party and 25% for the Liberal Democrats.
Labour lost control of traditional bellwether councils such as Bury in Greater Manchester and North Tyneside in the North East of England – areas in which Labour had for most of the 20th century enjoyed unrivalled support. Labour also lost control of Wolverhampton City Council and Hartlepool.
Elsewhere, the Conservatives took control of Southampton City Council and Harlow Council, seen as key battlegrounds ahead of the general election, which followed in 2010.
The result was seen as foretelling a Conservative landslide victory in the general election that was to follow two years later. As it turned out this was not to be and the Conservatives were forced to form a coalition with the Liberal Democrats, the first time there had been a coalition government since the Second World War.
Have the Tables Turned?
Now however, two years into government, there are some who are suggesting the tables have turned on the Conservative party.
“Everyone is braced for losses in the local elections. But it’s been 15 years since the low point for the Conservative party at a local level. The problem now is that there are only 170,000 local members so the campaigning at a local level suffers,” Tim Montgomorie, editor of Conservativehome.com the blog for Conservative grass root activists told CNBC.com.
The recent difficulties the coalition has found itself in have almost exclusively centered around the Conservative party for the first time since the general election in 2010. Not only has the UK suffered its first double-dip recession since the 1970’s but there have been splits in the Conservative party over policy decisions, particularly those announced in the Chancellor’s budget in March.
There has been dissention in the ranks over public opinion of Prime Minister David Cameron and Osborne, with one Conservative MP calling both men “posh boys” who did not understand the difficulties that ordinary voters had to cope with.
“For the first time since 2010 we are seeing the Conservatives in electoral difficulty. They are on 33% in opinion polls at my last estimate. So the Conservative share of the vote is well down on where it was in 2010,” John Curtice, professor of politics at the University of Strathclyde and an expert on UK political opinion polls told CNBC.com.
Adding to a sense of crisis was the revelation to the Leveson Inquiry into UK press standards last week that James Murdoch had been in communication with Jeremy Hunt, the Cabinet minister charged with deciding whether News Corp could buy the remainder of satellite broadcaster BSkyB last year.
It also emerged Hunt had been told by government advisers he was to have no contact with Murdoch during the process because he was acting in a quasi-judicial matter. Labour have called for Hunt to resign.
“There has been a lot of bad news recently and for the first time it is affecting the Conservatives since they came to power," said professor Curtice.
"Previously it was the Liberal Democrats suffering all the bad news and having been seen to have broken election promises. Now it’s the Conservatives being seen to screw up and there’s not a Liberal Democrat in sight,” he added.
Cities to Watch
Indeed, the Liberal Democrats are not expected to do well in the elections. Professor Curtice told CNBC.com he expected Liberal Democrats to be “crucified” in the local elections, pointing to the fact the party did very badly in previous local elections a year ago in what was seen by many as punishment for betraying a number of their election promises.
“If that trend continues it will be the destruction of the local base the Lib Dems have built up since that time,” he added.
As a result one city council to watch closely could be Liverpool, which the Liberal Democrats narrowly held control of in the previous local elections of 2008. Liverpool is one of the poorest cities in Britain and was until fairly recent history a traditional Labour stronghold. Last year the Liberal Democrats took a battering in the city holding on to just a few seats. Meanwhile, Labour's, Joe Anderson, the current leader of Liverpool council, is favourite to win the race to the be city's first mayor.
Unemployment in the city is very high, according to one of the UK’s largest trade unions, the GMB, which estimates that 30 percent of Liverpool’s 160,000 households have no one of working age in employment, making those households more reliant on handouts from the state that are now being cut back.
The GMB union said the worst affected region remained the north east of England where over a quarter of the 879,000 houses contained no individuals aged 16 over with a job. Once again that region goes to the polls this week and Labour would expect to regain control of the council it lost in 2008.
Another city council to watch will be Sheffield, where deputy prime minister and Liberal Democrat leader Nick Clegg has his parliamentary constituency. If the local elections take on a national perspective as expected, Labour could expect to make at least some gains there.
Meanwhile, if opinion polls are correct Labour should also expect to pick up seats in cities like Derby and Plymouth. The only fly in the ointment according to professor Curtice is whether Boris Johnson can retain his position as mayor of London in what has been another tight race which has seen a number of bitter exchanges between the two main candidates.
Another possible piece of bad news for Labour could come from it losing control of Glasgow city council in Scotland.
No Changing Course on the Economy
But even if Labour does score well in the local elections, it doesn’t necessarily follow that the coalition will be minded to change course on the economy.
“I don’t think that the local elections will necessarily have big consequences for economic policy. What is remarkable about the coalition is that there is unhappiness within the coalition in many respects but there is unity on the economy," Montgomerie noted.
"The Liberal Democrats are not arguing that economic policy should change and I think we can expect that level of unity to continue.”
“I think the Prime Minister comments over the weekend that he didn’t think we were even half way through the euro zone crisis were a clear indication of his thinking. If we were to see a change in economic policy I think it would come in response to any further upheaval in the euro zone and the consequences of that upheaval rather than as a result of the local elections this week,” he added.
What has become clear is that the focus of the elections has shifted so that the narrative of the elections could well become about how badly the Conservative party might suffer rather than being seen as a test of Ed Miliband’s leadership of the Labour party.
“A few weeks ago the question everyone was asking was whether this would be the end of Ed Miliband as Labour leader and could Labour advance enough in the local elections to save his leadership. Now it’s about whether Boris Johnson can hold London and how many seats Labour might gain in the local elections,” professor Curtice said.
“Will David Cameron and George Osborne was a restless Boris Johnson causing trouble from the sidelines if he is unseated as mayor of London? No,” he added.
Despite some opinion polls putting the incumbent mayor just ahead of his rival in Thursday’s mayoral election, Montgomerie highlighted the level of anxiety among the Conservative rank and file telling CNBC.com the election was simply too close to call.
“It has been a depressing six weeks for the Conservative party and a lot of the party’s hopes now rest on Boris Johnson’s re-election. I think that will be the big thing that will bolster the party or tips its morale down even further,” Montgomorie added.
He was much clearer however on the results of the local elections saying that if Labour could not win big this time, it might never do.
“In terms of the local elections Labour are ten points ahead of the Conservatives in the opinion polls, which is roughly the reverse of the situation in 2008. I wouldn’t be surprised to wake up on Friday morning and find out that Labour had gained a thousand local council seats. They won’t all come from the Conservatives, a lot will also come from the Liberal Democrats. But a gain of 1000 would not surprise me,” he added.
Matthew West is an associate editor of CNBC
