The New Statesman’s rolling politics blog

RSS

Miliband needs to change the subject

To be heard on the economy again, the Labour leader should talk more about public services.

So Ed Miliband has made another speech on the economy. This time the focus was an attack on the government's fiscal strategy. (My colleague George Eaton looks at the arguments in more detail here) This time there was a bit less of the broader, moralising language about the need for more responsible, non-predatory capitalism that has been the main feature of the Labour leader's rhetoric recently. The idea, it seems, was to set up next week's autumn statement as a test for the Chancellor. Can he show that his deficit reduction and debt containment plan is working? (Ed wouldn't be asking unless he was fairly sure the answer is "no".)

As I wrote in my column this week, Labour is still struggling to win the big macroeconomic argument about how best to balance the need to stimulate growth and show responsibility with public money. Ed Balls feels vindicated in his judgement that cutting hard and fast would choke off the recovery, making it harder to generate the revenue needed to shrink the deficit. But voters were persuaded by George Osborne's simpler analogies of household finance - we are in debt, so we must not spend. (No-one has found a way to turn Keynes's paradox of thrift into a nifty slogan, although Miliband's line about not being able to pay off the credit card without a job is a decent attempt.)

My suspicion is that people are simply not yet ready to listen to Labour at all on the economy. One shadow cabinet minister described the problem to me recently in psychological terms. The electorate's view of who is to blame for the mess we are in is affected by "cognitive dissonance" - the phenomenon that leads people to ignore evidence and arguments that challenge a position in which a prior emotional investment has been made. In other words, having been persuaded that Labour should not be trusted to run the economy and accepted that someone else should have a go, voters do not want to feel rebuked for choosing poorly.

That will change over time, since people will also always end up blaming the current administration for their pain. But no-one can say how quickly that will happen. Whatever the two Eds say about what should have happened, austerity is now the fixed backdrop to the economic debate. They need to find a way to move the conversation forwards to a discussion about who has the better ideas for treating people fairly and looking after them when there is no money to spend. That means no longer postponing difficult choices around public sector reform. The party needs an account of how it would get the right outcomes when simply spending more isn't on the agenda, thereby tackling also the tricky issue of how much money was "wasted" between 1997-2010 and how much "invested." In that respect, Labour has a certain advantage in that voters trust the party to care about services.

I am told that Miliband intends to tackle this question in the new year. That would probably coincide with a difficult period for the government as an inevitable winter crisis stirs up popular anger about bungled NHS reforms. If Miliband can come up with a compelling story about how it would get "more for less" in public services, the Tories would be vulnerable to the charge of being reckless and heartless cutters and Labour would be more credible on the deficit. It isn't yet remotely clear what that story might be though.