Osborne thinks budget discipline is Labour's biggest weakness. He's not wrong

Both Miliband and Balls know they need to do more if people are going to be persuaded to put them in charge of public money.

There isn’t much doubt which side enjoyed the Autumn Statement more in the Commons chamber. Tory MPs wore gleeful looks that showed they thought the Chancellor had planted his ball firmly in the back of Ed Balls’s net. They cheered with terrace gusto. Labour MPs looked solemn and attentive. Perhaps their expressions were meant to project scorn and disbelief at what George Osborne was saying. They could also be interpreted as masks of defeat.

The mood imbalance was, to an extent, inevitable. The focus of the Autumn Statement was things the Chancellor wants to talk about and things Labour says are missing the point. Osborne boasts that the economy is growing lustily. Labour asserts that people aren’t feeling it in the marginals. Osborne declares that his plan for fiscal prudence has delivered the stability from which future prosperity will flourish. Balls says Osborne’s plan has left voters feeling out of pocket.

The Tories think they have won the biggest argument of the parliament – the question of who was to blame for the economic mess and who is best qualified to clear it up. Labour think, or at least hope, that there is a bigger argument about who the economy serves, who can be trusted to look after ordinary people, and that the Tories are ill-equipped to meet that challenge.

The problem for Labour today was that Osborne got to set the terms of the debate, so Balls arguing vigorously in the debate he would rather be having sounded close to a capitulation. When he accused the Chancellor of being in denial, the charge ricocheted back in his face. The Tories guffawed merrily. The Labour leadership – both Eds – remain confident of having the last laugh, to the extent that the macroeconomic indicators fuelling Conservative levity conceal real pain that will cost the government votes. The economy that Tory MPs were cheering is on paper; the one Labour’s cost of living campaign focuses on is in winnable constituencies. That’s the theory, at least.

But what today also demonstrated is that Osborne believes Labour’s reputation for overspending is terminally toxic. One of the Chancellor’s favourite gambits is engineering parliamentary debates exclusively to force Labour MPs to vote against something that most voters think is sensible. This device has been deployed with some effect over welfare reform, challenging the opposition to advertise their squeamishness about benefit cuts, which they duly did.

Today, Osborne gave advance notice of the next trick he will pull from the same box. He intends to put a "Charter For Budget Responsibility" before parliament next autumn, reaffirming the coalition parties’ determination to press ahead with the current trajectory of deficit reduction. The tactical logic behind this move is clear. It means that, six months before a general election, Labour will have to choose between endorsing the government’s economic policy (which they won’t do) and voting against prudent budgeting (which they will insist is a principle they cherish).

The standard Labour line in response to these Osborne stunts is to denounce them as cynical game-playing, unworthy of indulgence by a serious opposition whose eyes are fixed on the higher prize of transforming Britain’s economy and society for the better. Etc.

For nervous Labour MPs that can sound rather like a declaration of intent to walk straight into the trap, although Ed Miliband probably has more leeway with his own side now than he did a year or two ago. Since the party’s successful conference – and the energy price freeze pledge that disoriented the Tories for weeks – there is more patience in the parliamentary Labour party for Miliband’s insistence on doing things "in his own time, on his own terms."

Still, after today, I suspect there will be increased pressure for one of those things to be a clearer line on long-term fiscal policy. Both Eds have said repeatedly in speeches and interviews that they recognise the spending constraints under which a future Labour government would operate. Osborne clearly thinks that message hasn’t reached the public and that he can continue pummelling Labour as the party that opposes every cut, while plotting to raise taxes, borrow and spend like Topsy.

Privately, senior Labour figures concede that this is a weakness. Both Eds know they need to do more if people are going to be persuaded to put them in charge of public money. There is, behind the scenes, a rolling discussion about the kind of measures and policies that will help Labour "cut through" with its determination to be prudent. The lesson that Miliband has learned from the energy price freeze is that voters don’t listen to vague declarations of intent. Many actively avoid anything the sounds like politics. So to get their attention, you need something big, bold, easy to understand and unignorable.

There are many on the Labour side who would like to get through a campaign without having to apply that logic to the delicate matter of budget discipline. Perhaps it can be avoided. The Eds may be right that a cost of living crisis will soon wipe the grins from Tory faces and that Osborne’s attempt to force the debate back to his preferred terms, while effective in the Commons today, will have diminishing returns over time. But the looks of unease on the Labour benches today suggest the party is still uncomfortable when the conversation turns to balancing the books. That is a weakness of which Balls will be well aware. I imagine the shadow Chancellor will be marching some sacred spending cow to the slaughter before polling day. 

Ed Miliband and Ed Balls at the Labour conference in Manchester in 2012. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Chuka Umunna calls for "solidarity" among Labour MPs, whoever is voted leader

The full text of shadow business secretary Chuka Umunna's speech to Policy Network on election-winning ideas for Labour's future, and the weaknesses of the New Labour project.

There has never been an easy time to be a social democrat (or “democratic socialist” as we sometimes call ourselves in Britain). Whereas the right can demonise the poor and extol the virtues of the market, and the hard left can demonise the market and extol the role of the state, our position of constraining the domination of markets and reforming the state is, by definition, more complex.

It is nonetheless the case that social democracy has a historic responsibility, in every generation, to renew democracy and preserve a civic culture. This is achieved not through soundbites and slogans, but through the hard-headed development of a progressive politics that reconciles liberty and democracy, new comers and locals to our communities, business and workers, in a common life that preserves security, prosperity and peace.  This historic mission is all the more urgent now and my determination that we succeed has grown not weakened since our election defeat last May.

But, in order to be heard, it is necessary to make balanced and reasonable argument that both animates and inspires our movement, and which is popular and plausible with the people.  The first is pre-requisite to the second; and there is no choice to be made between your party’s fundamental principles and electability. They are mutually dependent - you cannot do one without the other.

We are in the midst of choosing a new leader and it is clear to anyone who has watched the UK Labour Party leadership election this summer that amongst a significant number there is a profound rage against Third Way politics – as pursued by the likes of Bill Clinton, Tony Blair, Gerhard Schröder and others - as a rejection of our fundamental values.

In the UK there is a view that New Labour accepted an uncritical accommodation with global capital that widened inequality, weakened organised labour and we were too close to the US Republicans and too far from the European left.

I do not believe this is fair, not least because we rescued many of our public services from the scrap heap when we came to office in 1997 and there were very significant achievements  we should celebrate.  New Labour renewed our National Health Service in a fundamental way; we built new schools and improved existing ones; we set up new children’s centres all over the country; we brought in a National Minimum Wage; we worked with others to bring peace to Northern Ireland; we introduced civil partnerships.  Just some of our achievements.

However, though we may take issue with the critique, I do not think we can simply dismiss out of hand those who hold critical views of New Labour. Like any government, the New Labour administration made mistakes - it could and should have achieved more, and done more to challenge the Right’s assumptions about the world. In the end, it is not unreasonable to be ambitious for what your party in government can achieve in building greater equality, liberty, democracy and sustainability. It is far better we acknowledge, not reject, this ambition for a better world, as we seek to forge a new politics of the common good fit for the future.

Realising our values in office has been disrupted by globalisation and the surge of technological forces that are displacing and reshaping industry after industry.

Some argue that globalisation as an ideological construct of the right. But we must recognise that we live in an increasingly integrated world in which markets have led to an unprecedented participation of excluded people in prosperity, a rise in living standards for hundreds of millions  of people and a literacy unprecedented in human history – this is particularly so in emerging economies like my father’s native Nigeria. And the internet has led to a level of accountability that has disturbed elites.

Yet, this has been combined with a concentration of ownership that needs to be challenged, of a subordination of politics that requires creative rather than reactive thinking, and these global forces have exacerbated inequalities as well as helped reduce poverty.

So it is important that we understand the sheer scale and impact of new technologies. At the moment we are engaged in a debate about Uber and its threat to one of the last vestiges of vocational labour markets left in London, those of the black taxi cabs and their attainment of 'The Knowledge'. But the reality is that within the next decade there will be the emergence of driverless cars so we have to intensify our exploration of how to support people in a knowledge economy and the realities of lifelong learning, as well as lifelong teaching. As people live longer we will have to think about how to engage them constructively in work and teaching in new ways.

Once again, I'm addressing all of this, Social Democracy requires a balanced view that domesticates the destructive energy of capital while recognising its creative energy, that recognises the need for new skills rather than simply the protection of old ones. A Social Democracy that recognises that internationalism requires co-operation between states and not a zero sum game that protectionism would encourage.

Above all, Social Democratic politics must recognise the importance of place, of the resources to be found in the local through which the pressures of globalisation can be mediated and shaped. Our job is to shape the future and neither to accept it as a passive fate nor to indulge the fantasy that we can dominate it but to work with the grain of change in order to renew our tradition, recognising the creativity of the workforce, the benefits of democracy and the importance of building a common life.  Sources of value are to be found in local traditions and institutions.

This also requires a recognition that though demonstration and protest are important,; but relationships and conversations are a far more effective way of building a movement for political change.

One of the huge weaknesses of New Labour was in its reliance on mobilisation from the centre rather than organising. It therefore allowed itself to be characterised as an elite project with wide popular support but it did not build a base for its support within the party across the country, and it did not develop leaders from the communities it represented. It was strong on policy but weak on strengthening democratic politics, particularly Labour politics.

Over half a million people are now members, supporters or affiliated supporters of our party, with hundreds of thousands joining in the last few weeks. Some have joined in order to thwart the pursuit of Labour values but many more have joined to further the pursuit of those values, including lots of young people. At a time when so many are walking away from centre left parties across the Western world and many young people do not vote let alone join a party, this is surely something to celebrate.

So it is vital that we now embrace our new joiners and harness the energy they can bring to renewing Labour’s connection with the people. First, we must help as many them as possible to become doorstep activists for our politics. Second, I have long argued UK Labour should campaign and organise not only to win elections but to affect tangible change through local community campaigns. We brought Arnie Graf, the Chicago community organiser who mentored President Obama in his early years, over from the U.S. to help teach us how to community organise more effectively. We should bring Arnie back over to finish the job and help empower our new joiners to be the change they want to see in every community – we need to build on the links they have with local groups and organisations.

I mentioned at the beginning that in every generation Social Democracy is besieged from left and right but the achievements of each generation are defined by the strength of a complex political tradition that strengthens solidarity through protecting democracy and liberty, a role for the state and the market and seeks to shape the future through an inclusive politics. Solidarity is key which is why we must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office.

Yes, these are troubled times for social democrats. All over Europe there is a sense among our traditional voters that we are remote and do not share their concerns or represent their interests or values.  There is surge of support for populist right wing parties from Denmark to France, of more left wing parties in Greece and Spain and in Britain too. There is renewal of imperial politics in Russia, the murderous and abhorrent regime of ISIL in the Middle East, volatility in the Chinese economy and in Europe a flow of immigration that causes fear and anxiety.

But, the task of Social Democracy in our time is to fashion a politics of hope that can bring together divided populations around justice, peace and prosperity so that we can govern ourselves democratically. We have seen worse than this and weathered the storm. I am looking forward, with great optimism to be being part of a generation that renews our relevance and popularity in the years to come.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.