Labour rejects claims it would outspend the Tories as "total rubbish"

A source tells the NS that the party has not decided whether to match Osborne's post-2015 spending limits and says it would be "irresponsible" to do otherwise.

Back in 1997, in a bid to assure the electorate of its economic credibility, Labour famously pledged to stick to the Tories' public spending limits for the first two years of the new parliament. The move meant public services were initially drained of resources (the plans were described by then-chancellor Ken Clarke as "eye-wateringly tight") but history has recorded it as a political success. 

As he seeks to burnish his own economic credentials, some in Labour have been urging Ed Miliband to repeat this trick and sign up to the coalition's post-2015 spending plans (a subject I explored in the NS back in January). Such a move, so the theory goes, would repel the Tories' "deficit denier" attacks and convince voters that the party can be trusted with the nation's purse strings again. 

To date, it is an option that Miliband and Ed Balls have notably refused to rule out. As chief economic adviser to Gordon Brown, Balls helped mastermind the original 1997 pledge and has already declared that his "starting point" is that Labour will "have to keep all these cuts", a step towards accepting Osborne’s baseline. When Harriet Harman told the Spectator in September that Labour would not match the Tories’ spending plans and abandon its "fundamental economic critique" of the coalition, she was forced to issue a retraction.

But today's Independent reports that there is now a "growing consensus" in the shadow cabinet in favour of rejecting Osborne's spending limits and outlining an alternative strategy. Instead of promising to match the Tories' planned pace of deficit reduction, the paper says the party will pledge to invest in priority areas such as housing. It's important to point out that this doesn't mean Labour won't impose cuts elsewhere, rather it means splitting the burden more equally between cuts and tax rises and reducing borrowing (which, owing to the failure of Osborne's plan, is forecast to be £108bn in 2014-15) at a rate the economy can bear. 

Unsurprisingly, the Conservatives have leapt gleefully on the story, with the Tory Treasury Twitter account declaring, "we now know that Labour will go into the election with a plan to borrow and spend more, putting up the deficit". George Osborne, who remains the Conservatives' chief electoral strategist, has long hoped to run his own version of the party's successful 1992 campaign, which accused Labour of planning a "tax bombshell" after Neil Kinnock and John Smith chose not to match John Major's spending plans. But could the Tories' joy could be premature? A Labour source described the Independent story to me as "total rubbish", adding:

They've taken some Fabian Society report out next week which says Labour should not match Tory spending plans post 2015 and spun it as the view of the leadership. As we've always said, we will not make our tax and spending commitments till the time of the election. It would be irresponsible to do otherwise, who knows where the economy and public finances will be in two months' time, let alone two years.

As in 1997, Labour is likely to wait until just a few months before the general election before announcing its decision. Balls and Miliband have learned from the mistakes of the Tories, who promised to match Labour's spending plans in 2007 only to abandon this pledge after the crash in 2008.

But the question remains: has Labour genuinely not made up its mind or has it merely chosen not to tell us yet? My guess is the former but it's likely that Miliband, a leader who thrives on defying conventional wisdom, is minded to reject Osborne's spending limits. A pledge to do otherwise (a trick straight out of the New Labour playbook) would run entirely counter to the post-Blairite spirit of his leadership. Embracing Tory levels of austerity would also deny the economy the stimulus it will badly need and split the left. The challenge facing Labour is finding a means of rejecting Osborne's plans while simultaneously convicing the electorate that it can be trusted not to "crash the car" again. 

Update: Ed Balls was on LBC radio this morning (a slot dubbed "Balls Calls") and described the Independent report as "simply wrong". He said: 

It is an exclusive but it is wrong I’m afraid Nick and you know, it is a report of a Fabian Society commission which comes out next week. The Fabian Society is a research society, it has been there for 100 years, affiliated with the Labour Party, they are coming up with some conclusions about spending. It is not Labour Party policy. It is not something that I’ve even discussed…

Balls added that it would be "totally irresponsible" for him "to come along on here or the Independent and tell you our tax and spending plans two years before the election".  

Again, however, it is notable that Balls has not ruled out promising to outspend the Tories. He has merely restated that Labour will not publicly announce its decision until closer to the election. As I wrote above, it is plausible that in private Labour takes the view that it should reject Osborne's spending limits. 

Ed Miliband and Ed Balls at the Labour conference in Manchester last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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