Miliband offers answers on living standards, but the Tories just want to change the subject

On the politically defining issue of low pay, the Labour leader has the pitch all to himself.

At last week's PMQs, David Cameron branded Ed Miliband a "one trick pony", suggesting that the Labour leader had nothing to offer beyond a pledge to freeze energy prices (although as Cameron tacitly acknowledged, that "trick" is a potent one). But that's not a line he'll be able to repeat this week. In the next stage of Labour's cost of living offensive, Miliband has turned his attention from rising prices to falling wages. To coincide with Living Wage Week, he will make a speech on the subject tomorrow (as The Staggers revealed last week), providing further details of his plan to offer one-year tax rebates of up to £1,000 per worker to firms that pay employees the higher rate.

The cost of the policy will be met through the increased tax revenues and lower benefit payments that result from companies paying the living wage. For every £1 that employers pay to raise salaries to living wage-level, the Treasury saves 49p. The chunk of this accounted for by higher tax revenues (32p) will be paid back to firms that sign up to Labour's Make Work Pay contracts (a deft appropriation of one of the Tories' favourite slogans), while the Exchequer banks the remainder (another chance for Labour to demonstrate its commitment to fiscal responsibility). 

All three party leaders have praised the living wage (David Cameron described it as "an idea whose time has come" in a speech to Citizens UK in May 2010), but Miliband is the first to make a concrete offer. In response, the Tories have dismissed the plan as one that would require higher borrowing or tax rises, based on a line used by Ed Balls (not a source they're usually keen to cite) during the Labour leadership election. Balls said of Miliband's living wage proposal in 2010: "It seems to me that there would be a substantial extra cost either to the exchequer or to business".

In reference to these comments, Grant Shapps declared: "Even Labour’s own Shadow Chancellor Ed Balls says Ed Miliband’s latest unworkable policy would have a substantial extra cost to the Exchequer. Labour got us into a mess with too much borrowing and too much debt. And now they're calling for yet more borrowing and more debt.

"That would mean higher taxes and higher mortgage rates for hardworking people, hitting their living standards. It would make working Britain worse off, not better off – it’s the same old Labour."

But even were that the case (and it's important to note that Miliband's original plan, based on corporation tax breaks, differed from Labour's), it's not a line of attack that will do much to aid the Tories. Few voters, after all, are going to disagree with the idea of higher wages (a poll earlier this year found that 60% support a universal living wage even if it costs jobs). To the Tories' rhetorical assault, their response will be, but what would you do? 

Before the Conservatives' conference last month, there were rumours that they would promise a significant increase in the minimum wage as a means of shedding their image as "the party of the rich", but no announcement, or even a hint of future action, followed. After Labour's success in shifting the debate towards living standards, the party still gives every impression of wanting to change the subject. Cameron and other Tories regularly berate Miliband and Balls for "not wanting to talk about the economy", boasting that the UK is now forecast to grow faster than any other major western nation. But they would do well to remember that to most voters, living standards are the economy. Rising GDP and falling government borrowing mean little to them if they do not no share in the gains. The Tories remain confident that higher growth will translate into higher wages and that Labour's warnings of a "cost of living crisis" will soon appear as misplaced as past warnings of a triple-dip recession and unemployment of three million.

But rather than merely relying on the economy to deliver the goods (as it may fail to do in an era when growth has become decoupled from living standards), the Tories need to demonstrate that they have their own ideas to raise voters' incomes. Right now, on the defining issue of low pay, Miliband has the pitch all to himself. 

Ed Miliband speaks at the Labour conference in Brighton last month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

The Tories' aim is to put Labour out of business for good

Rather than merely winning again, the Conservatives are seeking to inflict permanent damage on the opposition. 

The Conservatives are numerically weak but politically strong – that is the peculiarity of their position. Their majority is the smallest of any single-party government since October 1974. Yet, to MPs at the Tory conference in Manchester, it felt like “2001 in reverse”: the year of Tony Blair’s second election victory. Then, as now, the opposition responded to defeat by selecting a leader, Iain Duncan Smith, who was immediately derided as unelectable. Just as Labour knew then that it would win in 2005, so the Conservatives believe that they have been gifted victory in 2020. David Cameron has predicted that the party’s vote share could rise from 37 per cent to a Thatcherite 43 per cent.

For Cameron and George Osborne, who entered parliament in 2001, this moment is revenge for New Labour’s electoral hegemony. They believe that by applying Blair’s lessons better than his internal successors, they can emulate his achievements. The former Labour prime minister once spoke of his party as “the political wing of the British people”. In Manchester, Cameron and Osborne displayed similarly imperial ambitions. They regard Jeremy Corbyn’s election as a chance to realign the political landscape permanently.

Seen from one perspective, the Tories underperformed on 7 May. They consistently led by roughly 20 points on the defining issues of the economy and leadership but defeated Labour by just 6.5 overall. It was their enduring reputation as the party of the plutocracy that produced this disparity. Those who voted for Labour in spite of their doubts about Ed Miliband and the party’s economic competence may not be similarly forgiving of Corbyn. To maximise their gains, however, the Tories need to minimise their weaknesses, rather than merely exploit Labour’s.

This process began at conference. At a dinner organised by the modernising group the Good Right, Duncan Smith, Michael Gove and the Scottish Tory leader, Ruth Davidson, affirmed their belief that, contrary to Thatcherite orthodoxy, inequality is a problem. Only the Business Secretary, Sajid Javid, an admirer of the libertarian heroine Ayn Rand, insisted that equality of opportunity was the defining metric.

George Osborne’s assured speech was most notable for his sustained appeal to Labour voters. Several opposition MPs told me how unsettled they were by the Chancellor’s declaration that Labour’s new leadership calls “anyone who believes in strong national defence, a market economy and the country living within its means” a Tory. He added, “It’s our job to make sure they’re absolutely right. Because we’re now the party of work, the only true party of labour.” The shadow minister Jonathan Reynolds told me: “We’ve got to be extremely clear that this is not business as usual. This is a real attempt by the Tories to put us out of business – possibly for ever.”

The Conservatives’ aim is to contaminate Labour to the point where, even if Jeremy Corbyn were deposed, the toxin would endure. For those opposition MPs who emphasise being a government-in-waiting, rather than a protest movement, the contrast between the high politics of the Tory conference and Corbyn’s rally appearance in Manchester was painfully sharp. They fear guilt by association with the demonstrators who spat at and abused journalists and Tory delegates. The declaration by a rally speaker, Terry Pullinger, the deputy general secretary of the Communication Workers Union, that Corbyn’s election “almost makes you want to celebrate the fact that Labour lost” was regarded as confirmation that some on the left merely desire to run the party, not the country.

But few Tory MPs I spoke to greeted Corbyn’s victory with simple jubilation. “It’s a great shame, what’s happened to Labour,” one said. “We need a credible opposition.” In the absence of this, some fear the Conservatives’ self-destructive tendencies will reassert themselves. The forthcoming EU referendum and leadership contest are rich in cannibalistic potential. Tories spoke forebodingly of the inevitable schism between European Inners and Outers. As the Scottish experience demonstrated, referendums are almost never definitive. In the event of a close result, the party’s anti-EU wing will swiftly identify grounds for a second vote.

Several cabinet ministers, however, spoke of their confidence in Cameron’s ability to navigate the rapids of the referendum and his pre-announced departure. “More than ever, he’s the right man for these times,” one told me. By this December, Cameron will have led his party for ten years, a reign exceeded in recent history only by Stanley Baldwin, Winston Churchill and Margaret Thatcher. That the Conservatives have so far avoided cataclysm is an underappreciated achievement.

Yet there are landmines ahead. An increasing number of MPs fear that the planned cuts to tax credits could be a foul-up comparable to Gordon Brown’s abolition of the 10p tax rate. Despite the appeals of Boris Johnson and the Sun, Cameron and Osborne have signalled that there will be no backtracking. At such moments of reflection, the Tories console themselves with the belief that, although voters may use Corbyn as a receptacle for protest (as they did Michael Foot, Neil Kinnock and Ed Miliband), they will not elect him. They also acknowledge that the current Labour leader may not be their opponent in 2020. The former paratrooper Dan Jarvis is most often cited as the successor they fear. As with Cameron and Blair, his relative lack of ideological definition may prove to be a strength, one MP suggested.

William Hague is fond of joking that the Tories have only two modes: panic and complacency. If the danger before the general election was of the former, the danger now is of the latter. 

George Eaton is political editor of the New Statesman.