Labour, and rather than "Tories" it should read "National Government".
weren't the parties that had been in the National Government running against each other?
No. The 'National Government' is a label given to the Tory dominated (
absolutely dominated) governments formed after the 1931 crisis and the 1931 and 1935 elections. The other parties in it were the National Liberals/Liberal Nationals (the right-wing of the Liberal Party; they effectively merged with the Tories following the 1945 election), National Labour (Ramsay MacDonald and those that followed him out of Labour. By the 1940s the party had collapsed and the label was a meaningless flag of convenience for certain cranks), and, but only in the early 1930s, the rest of the Liberal Party (minus the Lloyd George family and its hangers on). After the dissolution of the Wartime Coalition government (the parties of the National Government, Labour and the Liberals), the Tories decided to use the old National label, even though it was not a popular one.