Steve Richards: Are things really that bad for Labour?

Some Conservatives have doubts about whether they can win big at the next election

Those of us who worry that the frenzy over MPs' expenses is disproportionate have seen nothing yet. Wait until the end of the week when the saga over who claimed for what merges with the local and European election results. The results span several days. I expect to read the word "Meltdown" in relation to Labour's support on Friday, Saturday, Sunday and Monday. That would be quite a lot of meltdowns in the space of a few days.

While we are still in the post-expenses and pre-meltdown phase let's make use of the relative calm to examine whether Labour's position is as catastrophic as it looks. The polls suggest that Gordon Brown and his party are now in a worse state than when it was virtually destroyed in the 1983 election. At least as important, the verdict of the polls is echoed by some senior members of the Labour party and MPs, who are in a gloomier mood than I can recall at any point in recent decades, and that is saying something. One former cabinet minister put it to me in these terms in relation to the general election: "The party does not know what's coming. We are going to be slaughtered like never before and I mean slaughtered".

Such declarations are fairly typical and not especially surprising given Labour's calamitous poll ratings. There are many grave problems afflicting the Labour party. They include an unpopular leader, the quality of representation from cabinet level downwards, its lack of clear purpose, the fact that it is governing in the midst of a severe recession and a parliamentary crisis. I could go on, but I do not need to. We read and hear about them most days of the week.

What we read and hear less often is that the full picture is a little more complex. For a start there are signs that the Government's controversial hyper-activity in response to the collapse of the financial markets is working. Not so long ago banks were within hours of going bust and house prices were falling faster than the personal ratings of Gordon Brown. Last week it was reported that house prices have started to rise again.

Some retailers continue to register a surprising amount of activity. No bank has closed. The Government should have acted more swiftly in taking over Northern Rock and been much more prescriptive with the banks. It has made many mistakes. Nonetheless, the Conservatives opposed the takeover of Northern Rock and argued for a cut in public spending rather than a fiscal stimulus at the darkest point in the recession. If the economy shows a flicker of life will this be an issue at the general election?

Perhaps it will not be. The past has happened. But possibly the distinctive economic policies for the future might play at least a minor part in the campaign. Here again there is a difference of some significance. The Conservatives argue that Britain's debt is so frighteningly great it must be reduced more quickly than the Government deems necessary. Therefore I assume they would put up taxes and cut spending with greater speed and intensity if they are elected. Is this the right judgement or might it jeopardise the tentative hints of recovery?

Quite possibly the various policies for the future will not matter very much either and voters will decide that the Government must be kicked out even if its response to the global economic crisis is vindicated. But if that is the prevailing mood there may still be more scrutiny of the alternative offered by the Conservatives.

In some areas Cameron has been counter-intuitively innovative but his policies on Europe, the economy, and indeed the constitution are still works in progress, to put it politely. The Conservative leadership was understandably delighted yesterday with the endorsement of The Sun in the European elections. The newspaper praised the party for its strong euro-sceptic stance. Is this where a supposedly "progressive" and "modern" party should be? At least Labour used to be praised by The Sun in spite of its approach to Europe.

If Cameron had wholly modernised his party he would be closer to where Nick Clegg stands on tax-and-spend and even on Europe. But the two parties are still miles apart. It is not clear yet whether the gap will benefit Clegg or whether Cameron has cleverly positioned himself to appeal to traditional Tories who recognise much of the old mix, and some liberal types who believe that the Conservatives have changed.

I suppose the biggest wild card is the expenses saga, although the economy should matter much more. As the poll in The Independent suggests, the two bigger parties are playing out a calamitous goalless draw over expenses. The attitude of the Conservatives to the conduct of the Chancellor, Alistair Darling, was revealing. Even when Darling had the possibly fatal embarrassment of repaying a few hundred pounds yesterday as a result of his complex housing arrangements, senior Conservatives did not rush out until later in the day to condemn him. Perhaps they were worried that if they were to do so the spotlight would return to Cameron's own arrangements.

So far only a few Conservatives MPs have expressed in private their anger that Cameron claimed the maximum allowance to help pay for his country home while he has told others who claimed less that they had acted in ways that were unacceptable. Indeed I find more widely that it is some Conservatives who have doubts about whether they can win big at the next election while senior Labour figures expect a landslide defeat for their party.

In contrast, this column makes no predictions about the outcome of the general election. It does the opposite. It poses questions and raises possibilities. I have never known a build-up to a general election with so many wild cards – from the state of the economy to the longer-term consequences of the expenses affair.

Soon we will be heading for the noisier terrain marked "meltdown". Then big and valid questions will arise in the media and within the Labour party about the future of Brown's leadership, the significance of a cabinet reshuffle and much more besides. They should be addressed in the ambiguous context of a looming general election in which the outcome is not quite as clear as it seems.

s.richards@independent.co.uk