Miliband promises "big changes in our economy" in New Year message

The Labour leader emphasises his long-term plan to reform capitalism in an attempt to rebut the charge that he is too focused on short-term measures.

It is Ed Miliband's focus on living standards that has allowed him to define the political agenda for months, leaving the Tories in a strategic tailspin, so it's no surprise to see him put this theme at the centre of his New Year message. He says: "We are in the midst of the biggest cost-of-living crisis in a generation. Whether it’s people being unable to afford the weekly shop or worried about the gas and electric bill - or saying 'I have always thought of myself as reasonably well off but I’m really having trouble making ends meet'.

"Somebody said to me the other day 'I can't afford this government'; surely we can do better than this as a country. I think people are hurting, people are wanting us to do better. People are thinking 'look, I've made the sacrifices, where's the benefit? The government keeps telling me that everything is fixed, but it doesn't seem fixed for me.'"

To this, the Tories will reply that Miliband is only talking about living standards because he can't bear to talk about the economy; the rise in growth and the fall in unemployment. But as one senior Labour strategist told me, "For any normal voter, living standards are the economy." Conceding as much, George Osborne's advisers argue that wages are a 'lagging indicator' and that higher output will soon translate into higher salaries. But even if average wages do rise above inflation next year, the gains are likely to be concentrated among high-earners and, as the IFS recently stated, most voters will still be worse off in 2015 than they were in 2010.

But alive to the charge that Labour is too narrowly focused on short-measures, such as the energy price freeze, Miliband offers a preview of what will be one of his key messages in 2014: the need to make "big changes in our economy" in order to ensure that "we can earn and grow our way to a higher standard of living for people." The aim will be to show that Labour has a plan to deliver a permanent, rather than merely a temporary improvement in living standards.

Aware that one of the party's greatest challenges is convincing voters that it can be trusted to manage the public finances, Labour strategists are also keen to emphasise that this won't be achieved through greater borrowing or through endless spending pledges. Miliband says: "People do not want the earth. They would much prefer some very specific promises, specific things about what a government will do - whether it’s freezing energy bills, taking action on pay day lenders, or tackling issues around childcare which lots of working parents face. All of this is adding up to a programme for how we can change things. It’s clearly costed, it’s credible and it’s real."

One of the strengths of his pledge to freeze energy prices is that it does not involve a single pound of public money being spent. For the Tories, the unresolved dilemma remains whether to try and outbid Labour on living standards, or to continue to fight on their preferred terrain of the deficit and GDP.

Perhaps the most striking feature of Miliband's message is his attempt to manage expectations. He ends by stating that there are "no easy answers"  but that Labour would seek to "tip the balance towards hope and away from the struggles that you are facing." Some in Labour are concerned that a Miliband government, forced to make further cuts to public spending and introduce tax rises, could become rapidly unpopular (as Hollande's administration has in France). By emphasising that he won't be able to transform the British economy overnight, Miliband is rightly seeking to counter that danger.

As Jacob Hacker, the US theorist behind 'predistribution' told me earlier this year, "You’re not going to get a big bang of policy change. Instead, what progressives need to do is gain office, do some important things that improve the overall situation of the squeezed middle, and then get re-elected and repeat." With just 16 months to go until the election, Miliband is nudging Labour towards realism.

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

George Eaton is political editor of the New Statesman.

Photo: Getty
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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.