With English understatement, it is fair to say that the Government is having a tough time despite the relief of lower inflation this morning. Growth - Labour's number one mission - has stalled, the UK appears to be suffering more than most from bond market turbulence, in turn increasing the cost of Government debt and so making the fiscal position even tighter.  

The increase in interest payments on debt alone in the last few weeks is now likely to be greater than the savings achieved from means testing pensioner Winter Fuel Payments,  or the yield from the upcoming changes to the taxation of farm estates - both unpopular decisions for many of those affected. All that pain for the gain to be wiped out by a swing in the bond markets. 

Chancellor Rachel Reeves' difficult job has just got a lot harder ahead of the fiscal statement on 26 March and the three-year Spending Review expected in June. Spending cuts appear to be the least worst option when compared against further tax rises or breaking (or changing) her cherished fiscal rules, but only if the public sector unions play ball and step back from industrial action against pay rises they see as inadequate. So far they don't appear to have got the memo. To cap it all the Chancellor yesterday lost her Economic Secretary, Tulip Siddiq, to avoid the 'distraction' of corruption investigations in Bangladesh, a country formerly led by her Aunt, Sheikh Hasina. 

So is this the moment for Kemi Badenoch's Conservative Party? It would appear not.  Yesterday, Shadow Chancellor Mel Stride was faced with the open goal of a beleaguered Chancellor, back from a controversial trip to China, yet (to mix sporting metaphors) he barely landed a punch on Reeves who left the chamber in a stronger position than when she entered. Stride's boss Kemi Badenoch then used a GB News interview to make the eye-catching claim that people from rural “peasant” communities were responsible for Britain’s child grooming scandal. The claim made headlines but perhaps not in the way she intended.  

All this on the same day that YouGov published its first national opinion poll since the General Election. Labour appears to be losing support in all directions: to Reform but also to the Liberal Democrats and the Greens. But the Conservatives have also gone backwards, down two points since their worst ever election result when their seat tally fell to 121 seats.   YouGov has Labour on 26%, a lead of just 1%, but over Reform (on 25%) not the Conservatives (on 22%).  We are probably four years from the next election so polls matter little, apart from in one key respect. Polls of this type, broadly similar to another one by Find Out Now last week and More In Common today, lend support to Nigel Farage's claim that his Reform UK party is now rivalling the Conservatives as the main opposition to Labour.  

Going backwards in the polls after an existential-level election defeat, and faced with an unpopular Government, makes life really hard for Kemi Badenoch as she tries to define her leadership, revive her party's broken morale, and prepare a policy platform for the next general election. Instead of forming an effective critique of Keir Starmer, she instead is having to fight off Reform and face a seemingly insoluble strategic dilemma: does she follow Reform to the right and risk alienating those who switched to Labour and the Lib Dems in July, or return to the centre ground and risk boosting Reform still further? If she is still struggling in 12 months' time, will her party risk another painful leadership fight, and would a new leader - perhaps Shadow Justice Minister Robert Jenrick - seek a coalition with Reform, or seek to destroy it? 

We shouldn't get carried away. Reform has just five MPs, meaning 321 gains would be needed in 2029 for a majority of just one. The Conservatives have the organisation, the experience, and 150 years of electoral success to fall back on, and crucially an electoral system that makes breaking the Labour-Tory duopoly very difficult indeed. Just ask the SDP, Change UK or UKIP.  

Elon Musk's late night pot shots at UK Government Ministers may excite Farage and his supporters but the polls don't yet suggest much impact beyond the Politico-reading classes.  When Donald Trump enters the White House next week, he may provide another boost to Farage-style populism, or alternatively the realities of power and the unpopularity of Musk and Trump with the UK electorate may end up hindering rather than helping Reform UK. 

But the problem for the Conservatives remains. Governments - particularly those with a large majority - can regain support over a parliamentary term by governing, delivering on its promises and, as Labour are certainly doing, making unpopular decisions early in the hope they will be rewarded by voters when (and if) things improve. Oppositions can only oppose, wait for Governments to fail, and be ready as a government-in-waiting when they do.  Being on the rebound after 14 years in power is a serious challenge in normal circumstances, but whilst it remains unclear who the real opposition are, there is an extra mountain to climb.   

If you would like to discuss what this means for your organisation, do get in touch.