Alastair Campbell is not normally one to trash the state of the nation under a Labour government. But in a recent post on his blog he listed a stack of reasons to be miserable.
"Let's reflect on the fact that we are in recession, with unemployment up and public spending cuts to some services certain," he wrote. "Politics has been dominated by MPs' expenses. British troops are involved, and some dying, in a difficult and protracted war with no end in sight and a recent surge in media and public opinion against it."
To make things worse for Labour, the former head of communications at Downing Street added that the Sun had switched its support to the Tories. After 12 years of Labour, all the talk was of "time for change" and a Conservative government.
Campbell, however, is nothing if not a tribalist. His point was not to have a go at Gordon Brown or to write off Labour – but to do the reverse. The former spin doctor had just heard that there was a new poll out showing the Tory lead – around 20 points six months before – was down to 10. Despite everything, and the relentless onslaughts from a negative media, Labour was still in the game. If the gap was narrowing in such turbulent times, what would happen if economic recovery took hold?
If that poll was something to lift Labour spirits, then today's Ipsos MORI survey for the Observer, showing the Tory lead down to six points, should make them soar. Yes, there is a possibility it could be a blip in public opinion. But it cannot be ignored, as it suggests an acceleration of a pre-existing trend. Alarmingly for David Cameron, it shows the lowest Tory lead in any poll since December last year when Gordon Brown was being hailed across the world for his handling of the economic crisis.
If replicated at a general election, it would leave the Tories 35 short of an overall majority in a hung parliament – the first such outcome of an election since 1974. If the lead were to narrow further to five points, Labour could be the largest party in the Commons after polling day.
Among Tory MPs and candidates a new nervousness has been evident since early in the month. One Tory candidate noted a recent wave of hostility on the doorstep towards George Osborne, the shadow chancellor, who announced in October that the Tories would freeze public-sector pay as part of necessary economic austerity measures.
"They like Cameron, but not Osborne," said the young Tory. "That is a bit of a problem." Back in spring and early summer the Conservatives seemed well placed, with several polls showing leads of 20-plus. Understandably some in the Cameron camp were yearning for a landslide.
In July, as the Tories began to warn that unpleasant economic medicine would have to be swallowed, Philip Hammond, the shadow chief secretary to the Treasury, told the Guardian that his party needed as big a majority as possible to ensure it could take the kind of tough decisions necessary to put the public finances in order. "The worst outcome for Britain would be an unclear political result at the election," Hammond said.
He may still get his way. No self-respecting pollster would yet bet much against the Conservatives winning a decent overall majority next May or June, and certainly not on the basis of a couple of polls six months before an election. John Curtice, professor of politics at Strathclyde University, says Labour still has a mountain to climb before it can bring down the Tory lead consistently. "Closing a gap from 13 or 14 to five or six [consistently] is still a tall order," he says.
Brown's personal ratings certainly remain dire. Today's poll shows that some 59% of voters are dissatisfied with the way he is doing his job, against 34% who are satisfied. Cameron's are much better (but far from stunning), with 48% satisfied and 35% dissatisfied. Nick Clegg, the Liberal Democrat leader, is somewhere between the two, with 41% of voters satisfied and 26% dissatisfied.
Yet there is a sense in Westminster – not just in Labour circles, but across the parties and out in the country – that something may be changing. Danny Alexander, chief of staff to Nick Clegg, told the Observer that the Lib Dems were now having to "look very closely and seriously" at what would happen if they became the kingmakers in a hung parliament. One senior Tory MP, a former minister, said: "I think I can smell something. I am not sure people are quite so angry just at the moment. The economy is not so catastrophic. People's mortgages are low. Unemployment is not as high as everyone feared. And there is some sympathy out there for Brown. I sense some change." Economic optimism is, as our poll today also shows, at its highest level since 1997, 46% think the economy will improve over the next year, 28% believe it will stay the same, and only 23% think it will get worse.
Labour's morale hit rock bottom at its annual conference in Brighton at the end of September when the Sun pulled the plug and backed Cameron. But since then the paper's hounding of Brown over his badly written letter of condolence to the mother of a soldier who had died in Afghanistan is seen, in Downing Street, to have backfired. "We had 600 emails on that in the days after, and only seven were negative," said a Downing Street insider.
The stock market has risen steadily. Interest rates have been kept low. Ten days ago Labour held Glasgow North East convincingly – averting a repeat of the Glasgow East catastrophe in summer 2008 when it was ousted by the SNP. "No one is daring to feel optimistic," said one strategist. "But it is good to feel we have a reason to carry on." Labour's private polling shows, according to one senior cabinet minister, that "the figures are tightening".
Jon Cruddas, the MP for Dagenham, a likely leadership contender if Labour loses the election, believes that those who have written Labour off may yet look stupid. "The Sun bet the ranch on Cameron because they thought it would be a slam-dunk," he said. "The calculation was born out of a belief in the inevitability of a landslide." Cruddas argues that, if Labour can keep the Tory lead down to single figures or near that level for a sustained period, then the whole game changes. Then it will be the Tory party that will begin to divide, disagree and become racked with doubt as Labour starts to believe it really could perform a great escape. "While the Tory lead has been at 15%, the right in the Tory party has been prepared to keep quiet. But if it drops consistently to nine and less, it will get more demanding," he says. "Things could fracture and splinter in the Tory party and then everything becomes profoundly unpredictable." Cameron would be under pressure to swing to the right on issues such as immigration and crime and adopt more daring policies on public service reform as part of the austerity drive. Labour could then strike back with the kind of attack that Cameron has spent his first four years as leader trying to prevent – that of "same old Tories".
For their part, the Conservatives believe the dismal state of the public finances, and Labour's sky-high borrowing, give them ample reason to attack Brown up to election day. They also pin their hopes on voters believing that their candour on the need to rein in spending and borrowing will be seen as responsible, in contrast to Labour "recklessness". "Labour cannot hope to sell five more years of Brown, on whose watch the economy floundered, during an election campaign," said a Tory insider. Labour, however, believes the polls are turning – and for a good reason. Senior ministers seem convinced that the Conservatives made a huge strategic error at their conference in Manchester in October by laying out so candidly the need for spending cuts and an across-the-board freeze in public sector pay.
Douglas Alexander, Labour's election co-ordinator, says people will have picked up on the fact that Osborne appeared, as Alexander put it, to endorse a deficit reduction agenda with "glee". This, he claims, was the true Conservative instinct breaking free after years of rebranding aimed at showing the Tories had changed, he says.
"The Tories' mask slipped and they showed their real beliefs," Alexander said. The Tories had displayed "the fundamental contradiction between their branding and their beliefs". Labour now intends to hammer the Tories over their commitment to raise the inheritance tax threshold to £1m, benefiting only the very well off. "The message from them is that they help the rich while the little man pays," said a senior Labour figure.
If the economy continues to improve, Labour believes the Tories' austerity message, and calls for a smaller state that implies cuts to services, is not only dangerous, as it could choke off recovery, but will raise the question in voters' minds as to why they are being asked to bear pain when the worst is over. Tomorrow Brown will try to embed a sense of economic optimism in a cautiously upbeat speech to the CBI.
A former cabinet minister stated that everything depended on the economy. "Many people hate us still out there. But they are not going to the Tories in any numbers. They are going to the smaller parties, Ukip and the BNP. They blame us for the economy. They dislike politicians. And they worry about their jobs. If we can remove that fear as things improve, I think we really are back in it."
Today's poll does, however, present Labour MPs and ministers with an acute dilemma. Discussion of replacing Brown has not disappeared. Talk of an attempt to install an anti-Brown candidate as chair of the parliamentary party in this week's PLP elections, as part of a plot to force him to stand down before a general election, has faded. But some MPs believe that, with a hung parliament now emerging as a real possibility, the only hope of capitalising on tentative signs of a Labour revival – and saving their own seats – may be to install a more popular leader. "It cuts both ways," said one Labour MP. "If he is seen as the obstacle, then some will argue that he should go. But others will say if things are going in our direction, why change?" As it stands, Brown's allies insist he would never quit before an election and that the suggestion is even more laughable amid signs of some Labour recovery.
For Nick Clegg and the Liberal Democrats, there are also difficult questions to answer as a hung parliament comes into play. If the Tories secure more seats than Labour but fail to gain an overall majority – as today's polls suggest could happen – all the signs are that he would refuse to prop up Brown and Labour in any kind of deal. He takes the view that it would be the "moral right" of the leader with the most seats to try to form a government. That is still more likely to be the Tories.
But Clegg might not get his way. Historical precedent dictates that the incumbent – Brown – would have the right to try to form a government, even if his or her party has fewer seats. This happened after the 1974 election, when Conservative prime minister Edward Heath, with fewer seats than Labour, tried briefly tried to form a new government before throwing in the towel. Brown could try to hang on, even then, and make his own deal.
The betting would still be on the Tories forming the next government with an overall majority – but the confidence with which commentators make such predictions has gone.
"I think this could be a wild card election," said Professor Anthony King of Essex University. "I will be astonished if Labour gets back in [with an overall majority]. But I would not be astonished if there is a hung parliament."
