Osborne scratches swing voters' Ed Miliband itches
If the election were held tomorrow, we would be in unfamiliar territory.
Governments that preside over a fall in living standards tend not to win elections. So it follows David Cameron would be defeated.
Oppositions which aren't trusted with the economy - and whose leaders are less popular than the incumbents - do not win either. So hard luck, Ed Miliband and Ed Balls.
Yes, we could have yet another hung parliament.
But the conclusion both the Conservatives and Labour take from this is that the next election is wide open and it is possible - just possible - either side could win an outright, albeit slim, majority.
Labour would have been cheered by the polls unveiled at a fringe meeting in Manchester by Lord Ashcroft, the former Conservative deputy chairman and donor.
In the key marginals, Ed Miliband's party is firmly ahead - largely thanks to UKIP, and in part due to Lib Dem defectors who show little sign of wishing to return to the fold while Nick Clegg remains leader.
'No short cut'
Conservative strategists concede that Ed Miliband has occupied the right territory by banging on about the cost of living - a crucial concern for voters. They recognise, too, that his message has the benefit of simplicity and is popular: bash the big energy companies and freeze prices.
The Conservative argument is more complex and was laid out by the chancellor in his conference speech.
There is "no short cut" to raise living standards, just "hard graft putting right what went wrong". And cost of living isn't detached from the performance of the economy - improved by the Conservatives, George Osborne claimed.
Privately there is a fear that this is just a little too subtle.
This week there has been a search for policies which - for want of a better term - address "core" supporters' concerns with a "cut-through" to other voters.
Core Conservative voters would be cheered by the marriage tax allowance, help for aspiring homeowners, and a further swipe at those on welfare. But these policies are also designed to reach the sort of voters who might have defected from Labour to the Conservatives in the 1980s, when they wanted to buy their council homes. They see themselves as hard workers (and people on the dole as shirkers) and they welcome some financial help in hard times.
But the party's big policy brains are on the search for other proposals that might help solidify the support of those currently wavering towards them. And they worry that if the party tacks too far to the right to try to neutralise UKIP, it might lose the possibility of attracting some Lib Dem defectors of its own.
But among Conservative strategists, who have pored over the party's own polling, there is some cause for hope.
While they admire Ed Miliband's ability to capture the zeitgeist, their polling tells them he hasn't also captured voters' imaginations.
In other words voters like the Labour message but aren't sure about the messenger.
The Conservatives feel that while the electorate might like this or that Labour policy, they don't quite think the party, and especially its leader, is quite ready for government. This, in turn, diminishes the effectiveness of the policies as there is a disbelief that they will actually come into force.
So, listen back to George Osborne's speech. He spoke of "Ed Miliband's government", rather than a Labour government.
The chancellor also tried to convince us that, while Labour's policies were laudable, they were not serious. Freezing energy prices was a "back-of-a-fag-packet" commitment.
It was the Tories who were credible: no promise to abolish boom and bust. Whoever would do that? Ah, the last lot. Well, we know how that worked out….
But the strongest Conservative confidence-boosting measure arises actually from their own failure rather than success. George Osborne will be unable to clear the structural deficit by 2015.
Economically, bad. Politically, good.
It is felt that there is now enough of a recovery to play the message that electing Labour could ruin it. "Let us finish the job," the Conservatives say.
Had the deficit gone, as planned, by the election people might have felt less wary and more willing to back an opposition with attractive spending pledges. Now they might not take the risk, and stick with the devil they know. Labour could lead them out of the hell of austerity, but if it all goes wrong, they worry they will descend to another circle.
So, the Conservatives are issuing new challenges to Labour. Would it too aspire to run a surplus (Labour did so for three years after 1997)? If so, would it put up taxes or cut spending?
All this is to scratch painfully at the doubts about an alternative that is making the swing voters itchy.
But that phrase from George Osborne -'It's not over' - is accurate.
He and his advisers know the next election is not in the bag and that their electoral prospects won't necessarily rise in direct proportion to economic growth if people don't feel better off.