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.

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Richmond is a wake-up call for Labour's Brexit strategy

No one made Labour stand in Richmond Park. 

Oh, Labour Party. There was a way through.

No one made you stand in Richmond Park. You could have "struck a blow against the government", you could have shared the Lib Dem success. Instead, you lost both your dignity and your deposit. And to cap it all (Christian Wolmar, take a bow) you self-nominated for a Nobel Prize for Mansplaining.

It’s like the party strategist is locked in the bowels of HQ, endlessly looping in reverse Olivia Newton John’s "Making a Good Thing Better".

And no one can think that today marks the end of the party’s problems on Brexit.

But the thing is: there’s no need to Labour on. You can fix it.

Set the government some tests. Table some amendments: “The government shall negotiate having regard to…”

  • What would be good for our economy (boost investment, trade and jobs).
  • What would enhance fairness (help individuals and communities who have missed out over the last decades).
  • What would deliver sovereignty (magnify our democratic control over our destiny).
  • What would improve finances (what Brexit makes us better off, individually and collectively). 

And say that, if the government does not meet those tests, the Labour party will not support the Article 50 deal. You’ll take some pain today – but no matter, the general election is not for years. And if the tests are well crafted they will be easy to defend.

Then wait for the negotiations to conclude. If in 2019, Boris Johnson returns bearing cake for all, if the tests are achieved, Labour will, and rightly, support the government’s Brexit deal. There will be no second referendum. And MPs in Leave voting constituencies will bear no Brexit penalty at the polls.

But if he returns with thin gruel? If the economy has tanked, if inflation is rising and living standards have slumped, and the deficit has ballooned – what then? The only winners will be door manufacturers. Across the country they will be hard at work replacing those kicked down at constituency offices by voters demanding a fix. Labour will be joined in rejecting the deal from all across the floor: Labour will have shown the way.

Because the party reads the electorate today as wanting Brexit, it concludes it must deliver it. But, even for those who think a politician’s job is to channel the electorate, this thinking discloses an error in logic. The task is not to read the political dynamic of today. It is to position itself for the dynamic when it matters - at the next general election

And by setting some economic tests for a good Brexit, Labour can buy an option on that for free.

An earlier version of this argument appeared on Jolyon Maugham's blog Waiting For Tax.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.