Analysis: The state of the parties this summer

As parliament enters its summer recess, the political scene feels very different from the start of the year. Back in January, Labour and the Conservatives were neck and neck in the polls, prime minister David Cameron was still riding the crest of his European veto wave, and serious questions were being asked of the Labour leader Ed Miliband, who could only manage a neutral rating even among his own supporters. Now, in Ipsos MORI's latest Political Monitor, Labour has its biggest lead since Gordon Brown's brief honeymoon in September 2007, satisfaction with the government is at its lowest ever, and 52% of voters (including around four in ten Conservative and Liberal Democrat supporters) doubt the coalition will survive until 2015. So when did this happen, and why?

As far as when, the answer seems to be clear. The period between the March budget and the May local elections does deserve to be called an "omni-shambles" for the impact it had on the government's ratings. At first the public's ire was directed at chancellor of the exchequer George Osborne and his Budget; the worst received for 16 years, leading to a 11.5 point negative swing in his personal ratings, and new lows for the government and the prime minister's approval ratings too. Then the local elections cemented this, when the Labour party gained 32 councils and the Conservative party lost 12. The question immediately after the elections was – is this just a blip, or the start of a new phase?

So far, the answer seems to be it marked a real change. Consider the Conservatives' consistent vote share in the first four months of the year: 38-35-36-35%. But in the last three months? 33-31-31%. Likewise for Labour, whose share up to April was 38-41-37-38%, but since May has been 43-40-44%. The Liberal Democrats, incidentally, have been within one point of 11% every month except May.

Clearly, the first reason why this change has occurred is linked to its timing – the impact of the Budget, but just as importantly the ongoing bad news about the state of the real economy, with the announcement of the double-dip recession in April as well. The economy is by far and away the number one issue facing the country: it has been top of our Issues Index for 46 consecutive months, while over the same period concern about unemployment has increased threefold. In addition, on a range of measures of economic competence, the coalition – and the Conservatives in particular – do not have the upper hand they once had. In May, Labour closed the gap as the party with the best policies on the economy to a mere one point, while in July we saw the high expectations for the coalition back in May 2010 to deal with the economic crisis effectively halve from 59% to 28%.

Nevertheless, while the economy is still the prime political question, that is not the only reason why the summer feels so different to the start of the year. The public's view of the health of the coalition is also on the slide, in the context of arguments over issues such as House of Lords reform, stirrings from Conservative backbench MPs, and more robust attempts at differentiation from the Liberal Democrats. Only a quarter of the public now think the Coalition is united – down from 43% in April 2011 – and even a majority of Conservative and Liberal Democrat supporters themselves say the government is not working as one. Perhaps it is not surprising that six in ten now say the coalition has been a bad thing for its two partners, notably including 57% of Conservative voters who think it has been unhelpful for their own party.

And yet it would be wrong to think that Labour faces no challenges of its own. A large part of their increased lead this month is due to a softening in the Conservative vote, rather than a change in the underlying picture. While Ed Miliband has turned around his rather lukewarm support among his own voters, among the public at large he still has work to do. Moreover, despite some successes in the local council elections, Labour still only receives around a quarter of the vote in the south east and south west.

So although there has been a clear change in momentum since the start of the year, no party currently has a convincing enough answer to the country's problems for them to be sure of victory at the next election. Partly that is because the public themselves are divided, both supporting the idea that there has been too much "big government" in the last few years, while worried that the most vulnerable will be left behind. Furthermore, we are still split right down the middle on whether there is a need to cut spending on public services to pay off our national debt. On those key issues, the challenges facing the parties remain the same.

Gideon Skinner is head of politics at Ipsos Mori