Tom Peterkin: How can Labour avert disaster?

Scottish Labour leader Jim Murphy recently expressed concern over poll results. Picture: John Devlin

Never before has Scottish Labour faced so momentous a challenge. Its once unquestioned place as Scotland’s natural party of government has been gradually eroded before being comprehensively demolished by the SNP.

And now, less than nine weeks from arguably the most important general election in Scotland’s history, Labour looks as if it is about to be swamped by a tidal wave of nationalist support.

“This is a peculiar time in Scottish politics,” admitted one MP, out knocking on constituency doors ahead of yesterday’s Scottish Labour Conference in Edinburgh. “The polls are really worrying. We are having to fight for every vote.”

Faced by apocalyptic polls, reports of infighting and internal frustration over leader Ed Miliband’s failure to categorically rule out dealing with the SNP in a hung parliament, Labour appears trapped in a terrible place.

An atmosphere of despair prevailed as Miliband came to Edinburgh yesterday to address his Scottish conference. The question on the lips of every delegate at the Edinburgh International Conference Centre was blunt: what on earth can be done to revive the party’s fortunes?

As Scottish Labour’s strategists brood over their predicament, they are fine-tuning the plan they hope will turn the party around.

It should come as no surprise that at the heart of that plan lies their new Scottish leader, Jim Murphy. Much faith has been invested in Murphy in the belief that he has the dynamism to inject some genuine leadership into a rudderless organisation.

The fervent hope that Murphy will turn out to be the party’s saviour is a tacit acknowledgement that it is a lack of leadership which has led to the mess the party finds itself in today.

Murphy is the seventh leader of Scottish Labour since devolution, an astonishing turnover which has contributed to the sense of drift in a complacent party.

Last week, a poll commissioned by Lord Ashcroft put into stark relief the potentially devastating consequences for Labour of years of taking Scotland for granted. These have been exacerbated by the SNP’s extraordinary post-referendum energy which has contributed to Ashcroft’s prediction that the general election will leave the SNP with 56 MPs out of 59 in Scotland.

A SNP avalanche of those proportions would be a terrible indictment of Labour’s decline from power, particularly in its traditional heartland of Glasgow, where legend has it that they used to weigh the ballot papers rather than count them.

According to Ashcroft’s survey, which looked at eight seats in detail, Scotland will turn from red to yellow leaving Willie Bain in Glasgow North East and Murphy (hanging in there by his fingernails) in East Renfrewshire as Labour’s only MPs in Scotland. The remaining non-SNP MP from north of the Border will be the sole Tory David Mundell, who is also facing the fight of his life to keep his job.

Predictions that Glaswegian stalwarts such as Margaret Curran and Anas Sarwar are to go are made bleaker by the thought of handing over the Kirkcaldy & Cowdenbeath and Edinburgh South West constituencies – currently occupied by Gordon Brown and Alistair Darling until they stand down in May – to the SNP.

If that was not bad enough, the Ashcroft poll has led to reports that some Labour MPs are now urging Murphy to concentrate on No-voting areas such as Edinburgh, the Borders and Aberdeen and abandon the defence of traditional strongholds in the west of Scotland.

Such talk has infuriated those close to Murphy, who say the last thing Labour needs is to turn in on itself, adding that it would be ludicrous for the party to turn its back on Scotland’s largest city.

But there are those within Labour who suspect that complacency bred by years of dominance in areas like Glasgow has led to the party’s election machine being out-gunned on the ground.

Their suspicions appeared to be borne out by the Ashcroft poll’s finding that SNP campaigners, buoyed by the mass Yes Scotland movement, were more active than their Labour counterparts in all eight constituencies.

To an outsider the challenges Murphy faces appear almost insurmountable. His team, however, prefer a more pragmatic approach, arguing that there is still time to turn things around and that they have a strategy to take them out of the black abyss forecast by the opinion polls.

A key moment will come this week when the Scottish Government publishes its annual balance sheet. The Government Expenditure and Revenue Scotland (GERS) figures for 2013/14 are expected to reveal a precarious financial situation caused by a fall in oil production and the rising cost of extracting from the North Sea.

Murphy will put those figures at the heart of his constitutional argument, an area where Labour has been out-fought in the past.

Although on the victorious side in the referendum, there remains a lingering perception that the Scottish party has been out-manoeuvred on the constitution. Instead of installing itself as the natural party of home rule, under Johann Lamont’s leadership, it entered the Smith Commission negotiations rather grudgingly with arguably the least radical more-powers package.

Murphy has attempted to rectify that perception. With Gordon Brown, he recently promised a “Vow Plus” that offers a more extensive package than the one reached by the cross party agreement overseen by Lord Smith.

Murphy’s “Vow Plus” would see Scotland get clearer powers to vary social security, full control over housing benefit and the ability to set a higher state pension north of the Border with Holyrood making up the difference.

Crucially, however, the “Vow Plus” would still be based on the principle of sharing and pooling resources across the UK. The sharing would remain underpinned by the Barnett Formula, the funding mechanism that determines how much money Scotland receives from the UK Treasury. By pooling resources across the UK, Murphy maintains a clear constitutional dividing line between Labour and the SNP.

Having signed up to Smith and accepted the referendum result for the time being, the SNP is fighting the general election on the basis that it wants to see full fiscal autonomy for Scotland – a constitutional settlement that would see everything devolved to Edinburgh apart from defence and foreign affairs.

Murphy will argue that devolving all tax and spending, including North Sea oil, to Scotland would see the end of the Barnett Formula, which provides £1,200 per head in Scotland more than the UK average.

Labour expects the GERS figures this week to be a dramatic illustration of the volatility of oil revenues. Indeed, Murphy’s team believe falling oil production will see an £8 billion black hole in Scotland’s finances, to be revealed on Wednesday.

That will enable Murphy to characterise the SNP’s plans for full fiscal autonomy as “austerity-max” and argue that any proposal that involves scrapping the Barnett Formula would be economic madness.

Another prong of attack will be challenging the SNP’s argument that the economic risks of full fiscal autonomy can be offset by the transfer of job creating powers to Scotland.

According to those close to Murphy, the publication of First Minister Nicola Sturgeon’s “Scotland’s Economic Strategy” has helped knock a hole in that argument, because in it Sturgeon abandons Alex Salmond’s plan to cut Corporation Tax – thereby dropping the SNP’s key job creating policy should full fiscal autonomy come to pass.

But an unwelcome complication for Murphy and Labour is the question mark over Ed Miliband’s leadership.

Miliband’s reluctance to categorically rule out dealing with the SNP after the May election still festers. Scottish MPs, frustrated that the idea of a Labour/SNP pact is gaining currency, challenged the UK leader on the issue last week.

There are those within Labour who agree that Miliband should not pre-judge the outcome of the election. There are also those who believe the UK leader is reluctant to tackle the issue head on because he does not want to be seen as a London politician telling the Scots what to do.

But there are those who want Miliband to kill the issue stone dead.

They are annoyed that the chatter about Miliband’s view is distracting from what they see as the flaws in the SNP’s negotiating stance.

Sturgeon and Salmond have dismissed the idea of working with the Tories, but they have a list of demands, such as full fiscal autonomy and scrapping Trident renewal, that they want to take to Labour.

“They are really vulnerable on this question,” said one MP. “They have these red line issues that Ed Miliband will not give in to. What happens next? Do you then bring down a potential Labour government and bring in the Tories?”

This line of argument is consistent with Murphy’s key message that a vote for the SNP will send the Tories back into power.

As the election comes nearer, that message will be relayed by Murphy ever more stridently. Indeed, about the only good news for Labour to come from the Ashcroft poll is that it supports the notion that voting for the SNP could put the Conservatives back in power.

Beyond that key message, over the next few weeks Murphy’s strategy will also see him talk about a return to traditional Labour values.

Coming to the fore will be workplace policies including his recent announcement to commit Labour to raising the minimum wage to £8 an hour and abandoning zero hours contracts.

By doing this, Murphy hopes to build on his key policies to fund 1,000 Scottish nurses through Miliband’s “mansion tax” and restore the top rate of income tax to 50 pence.

Another theme will be Labour’s commitment to “localism”, handing power from Holyrood to councils and communities. It is an approach that Murphy will contrast with what he believes is the centralising agenda of the SNP – the most notable example of which is the merging of the Scottish police forces.

Within Murphy’s camp there is recognition that Labour at Holyrood has failed to hold the SNP to account effectively.

Fundamental to Murphy’s strategy will be to change that. During his short spell in charge it is something that the Scottish Labour leader has already proved adept at.

Murphy’s team points to the Scottish Government’s decision to publish weekly hospital Accident and Emergency waiting statistics following intense pressure from Labour. There will also be more work to scrutinise the SNP’s stewardship of the NHS – an approach that Labour believes will bear fruit.

His team also claim Murphy has led the agenda on fracking. He called for a “triple lock” ban, including local referenda on planning permission for unconventional gas extraction. Shortly afterwards the SNP administration announced its own moratorium on the issue.

Similarly, they say, his policies on educational attainment were followed by Sturgeon seeking inspiration from the London Challenge, a Blairite schools policy introduced south of the Border to raise standards.

Another feather in his cap is Sturgeon’s announcement that the new women’s “super-prison” planned for Inverclyde is to be axed after Murphy called for the proposal to be abandoned.

It is undeniable that Murphy has brought a new dynamism to Scottish Labour. But the really worrying thing for the party as it gathers in Edinburgh is that the “Murphy effect” has yet to result in a bounce in the polls.

In a recent interview, the Scottish Labour leader looked ahead to May. The polls were telling him his party was toiling, but Murphy’s response was to say he expected voters to “switch late and switch big” to Labour, thus enabling his party to hold on to its 40 Scottish seats.

At this stage in proceedings his comments look like wishful thinking unless the late switch he is crying out for is very big indeed.