Miliband has brought together living standards and responsible capitalism

The Labour leader argued convincingly that the cost-of-living crisis is the direct result of the deep structural faults in the economy.

There was plenty of politics in Ed Miliband’s speech this morning. The Labour leader has an election to win and banker bashing isn’t going out of fashion any time soon. But the speech was also a serious attempt to bring together the twin tracks of Labour’s economic thinking, which have in the past seemed a little too distant.

By arguing that the cost-of-living crisis is the direct result of the deep structural faults in the economy Miliband made a jump from short-term pressures on family finances to the prospect of long-term decline and insecurity. He brought together the micro-economics of living standards with an argument for a structural, macro-economic reordering.

The case for rebalancing, not just a resumption of growth, is now compelling. Next month a Fabian Society research report weighs up the positive and negative signals emerging from the recovery. On the plus side, growth is of course better than no growth, and the labour market has brought genuine good news. But most of the indicators suggests a deeply-skewed recovery which won’t deliver sustainable, broadly-shared prosperity any time soon: business investment and productivity are flat; household savings are falling and housing is becoming less affordable; real median earnings are not yet growing; and poverty and inequality are on the rise.

In his speech, Miliband talked about business investment, skills and the changing nature of jobs. So Labour is making a serious attempt to respond to these structural faults with long-term structural solutions, not just election-day bungs.

Now the party has to sign-up to market interventions which will move the needle on the big macro-economic indicators, and without costing too much public money. To make a difference on this larger scale it takes a lot of micro-economic interventions (the clue is in the name). So Labour needs to leap-frog the Chancellor's intervention on the minimum wage and promise a slew of similarly radical policies.

The story continues next weekend when Ed Balls makes his first big speech of the year at the Fabian New Year Conference. Balls has sometimes been portrayed as somewhat detached from Miliband’s agenda for economic reform. However, in his interview with the New Statesman earlier this month, the shadow chancellor talked of the economic task being to deliver more balanced growth.

The more Miliband makes "responsible capitalism" sound like it’s really about the economic fundamentals of investment, earnings, productivity and inequality, the more he and the shadow chancellor are likely to be at one. Labour will not be able to sell its economic story with only one Ed. Next week is Balls’s chance to pick up the baton.

Ed Balls will be speaking at the Fabian New Year conference on 25 January www.fabians.org.uk

Ed Miliband visits the Five Points Brewing Company in Hackney after delivering his speech on banking reform this morning. Photograph: Getty Images.

Andrew Harrop is general secretary of the Fabian Society.

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.