Miliband is remaking Labour as a true people's party

The reforms announced today will enhance Labour's traditional links and lay the foundations for new, open and powerful alliances.

Ed Miliband and the Labour Party cross a watershed today, opening up a new phase in the history of the Labour movement and the possibility of a new openness in British politics. The announcements Ed has made today are about renewing and revitalising not just our party, but the wider politics within which we operate. They mark the beginning of a bold and historic attempt to make Labour a true people’s party once more, a party of mass membership, with deep and strong roots in communities and constituencies across the whole of our One Nation. And the unions are not an impediment to our achieving this, they are the key.

Three million people or more are today members of trade unions affiliated to the Labour and thus have a special relationship with our party. That relationship is hugely important. It anchors our party in work and community and ordinary people’s lives. It must never be broken because that would break Labour and break our ability to govern once more in the interests of working people in the teeth of corporate power, financial elites and other entrenched vested interests.

But that historic relationship must be renewed and strengthened, to reflect a modern world where people – including trade unionists – want more from politics. They rightly want a greater sense of personal connection and engagement with institutions, including the Labour Party, that have become too distant from their lives and concerns. The change to the process of affiliation which we have laid out today is about inviting individual trade unionists to affiliate to Labour in a more direct and conscious manner than ever before – to take a fuller part in the future direction of the Labour Party, and through it in the future direction of our country.

The prize, for those individual members, for the unions of which they are a part, and for Labour, is to come together anew, powerfully and openly, as a movement for change in our country. A movement that builds an economy and a society that delivers opportunities and better outcomes – wealth and education and culture and community – for everyone, not just for those with money or connections at the top. We have to walk that walk on behalf of the many once more, as well as talking the talk.

That change will entail challenge and risk for all concerned. For our party it means scrutinising the routes by which people are selected to represent our party, to make sure that money or other means can’t load the dice in favour or one candidate or another. It also means we will need to work harder in the future to persuade individuals, and the unions they belong to, that they should support Labour, financially and philosophically. But relationships are strengthened by such tests and I believe we can emerge from this challenge with our traditional links enhanced and the foundations laid for forging new, open and powerful alliances with individual citizens and other community organisations – including currently unaffiliated trade unions.

However, it is not just the Labour movement that Ed Miliband has thrown down a gauntlet to today. Our pledge to make the relationship between the trade unions and the party even more transparent, to curb the role of money in our politics and to open up our party more than ever before is a challenge to all political leaders in the UK, but especially to David Cameron and his Conservative Party. And though people in the media and our political opponents will ask questions today about exactly how these changes will work within our party, Ed Miliband has been clear that, whatever the precise mechanisms, he is determined to bring about this historic reform. Far less clear is whether David Cameron has the courage or the integrity to pick up the gauntlet and put his own house in order.

Will David Cameron match Ed’s pledge to do something about MPs holding down jobs outside Parliament? It’s anathema to most of our constituents and the vast majority of Labour MPs, but second nature to so many on the Tory benches. Don’t hold your breath. Or will he do something to acknowledge the rottenness of a small number of hugely wealthy individual donors bankrolling the operations of the Conservative Party? No longer Lord Ashcroft, perhaps – though his millions helped secure seats for so many – but there are plenty of others queuing up to buy patronage and policy. Don’t take my word for it: just follow the money to seats in the Lords, the tax cuts for millionaires and the corporate bank accounts that the Treasury can’t or won’t touch.

The contrast in British politics and the choice that the British people will face at the next election is clearer than ever today. Labour under Ed Miliband wants a new politics and a new deal for the British people: one based on transparency and openness, fairness and trust, the interests of the many not the few. Today’s announcements underline those ambitions, and the courage and conviction with which Ed will pursue them. We are clear that Britain needs stronger trade unions, with more members and stronger rights and representation in public and private sectors. Their decline over the last 30 years has seen a fall in wages, living standards and social solidarity that Labour is committed to reversing. But Labour is equally clear that the Falkirk fix and David Cameron’s crony Conservatism are the last gasp of the old politics, of a way of governing Britain which the British people are rejecting, and we are determined to consign them both to the past.

Ed Miliband delivers his speech at The St Bride Foundation, Fleet Street earlier today. Photograph: Getty Images.

Owen Smith is Labour MP for Pontypridd and Shadow Secretary of State for Work & Pensions.

Photo: Getty
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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.