Miliband can't keep dodging the borrowing question

The Labour leader's World At One interview showed why he should make the explicit case for a short-term increase in borrowing.

Every time that Labour attacks George Osborne for planning to borrow £245bn more than planned, the Tory rejoinder comes, "but you would borrow even more!" Asked today on The World At One whether he would do so, Ed Miliband replied: "I don't accept that borrowing would be higher under a Labour government", arguing that higher growth would mean a lower deficit. But he later added that borrowing would be lower "in the medium term", leaving open the question of whether it would be lower in the short term. 

The answer, of course, is that the deficit would likely be higher in the short term as Labour borrows to fund its five-point stimulus for jobs and growth. But when pressed by Martha Kearney on how the party would meet the £12.5bn cost of a temporary cut in VAT (one of the five policies), Miliband dodged the question and replied: "the whole point about a VAT cut is that it would get growth moving and if you get growth moving you get more tax revenue in". On that point, he is almost certainly correct, which is why Labour can reasonably claim that borrowing would be lower in the medium term. But that doesn't resolve the issue of borrowing in the short-term. 

At some point before the election, and sooner rather than later, Labour will need to decide whether it is prepared to make the explicit Keynesian case for a deficit-financed stimulus. Without declaring that it would borrow for growth (and explaining why), the party merely reinforces the impression that borrowing is always and everywhere an economic ill.

In a radio interview, Miliband can just about get away with an answer as evasive as the one he supplied. But in an election debate with David Cameron, he will not be able to dodge the question of whether Labour would borrow more in the short-term. In which case, Miliband and Ed Balls should prepare a convincing answer now. 

Ed Miliband speaks at the CBI's annual conference on November 19, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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