A mainstay of political commentary this parliament has been the assertion that Labour lacks economic credibility, which has generally been taken to mean the party is perceived to have spent too much money when in government and isn’t yet trusted to take charge of the Exchequer again.
That is certainly the judgement that the Conservatives want to embed in the minds of voters. Tory election prospects rest heavily on the hope that Britain will ultimately recoil from the idea of returning to office the people who presided over the worst financial crisis in living memory and reject Ed Miliband as a potential national leader. David Cameron’s campaign message will, in essence, be: “See how far we’ve come. The economy is growing. Now look at that guy. Are you ready to risk it all on him?”
At the root of Miliband’s speech on the economy today is the ambition not simply to rebut the charges that Tories would level against Labour but to change the terms on which economic credibility itself is judged. Opposition strategists know that Labour will struggle to win an arms race with the Conservatives over who is more committed to spending less. George Osborne has already made it clear this year that he intends to challenge Labour to a kind of austerity arm-wrestle – who can be more macho with their cuts – and Miliband is declining the invitation.
Instead he wants to cast the Tory approach as itself lacking credibility because it follows benchmarks of economic performance that don’t equate to long-term prosperity for the majority. Labour will now seek to characterise the Tory position as cutting for cutting’s sake, sitting back and waiting for growth to do the rest. It is Miliband’s profound conviction (as he has consistently argued over many months) that structural flaws in the way the British economy is organised mean that even a return to headline GDP growth will not effectively feel like a return to good times for most voters.
The “cost of living crisis” thus becomes not a temporary hit that people are taking as Britain emerges from recession but an historic challenge that needs to be met with a programme of systematic interventions. The Labour view is that the Tories are conceptually unable to meet that challenge because they wear ideological blinkers. As Douglas Alexander says in an interview in this week’s New Statesman: “The Conservatives are in hock to a bad philosophy, which is that in the 21st century, trickle-down is the route to modern prosperity.”
Labour’s strategic ambition for 2014 is to escalate the cost of living question, which dominated much of the political agenda towards the end of last year, from a debate about how best to ease pressure on family finances in the short term to a debate about which party truly understands where the squeeze is coming from and what therefore needs to be done in the long term to correct it. In his speech today, Miliband categorised that as a choice between “new economy and old economy”, with Osborne and Cameron peddling obsolete remedies that will keep Britain locked in a pattern of unfairness, lacklustre growth, crappy wages and perpetual insecurity.
The judgement in Miliband’s campaign team is that the Tories think they have so definitively won the blame game over who is responsible for the nation’s economic malaise – Gordon Brown and friends – that they can pretty much re-fight the 2010 general election but with more confidence. (Plus a bunch of 1992 attack lines thrown in for good measure.) In response, Labour will say they are the party that has moved on, that is talking about the future with optimism and vision when their opponents are desperately pointing at the past to ramp up fear and division. The Tories will try to fight the election on Labour’s economic record. Labour want to build an argument that says the coalition’s record is so dismal and their prescriptions are so faulty precisely because the Tories (and their Liberal Democrat collaborators) haven’t learned the lessons of the build-up to the crisis.
In essence, Miliband announced today that he has no intention of fighting a general election on economic terms dictated by the government. He nominally recognises fiscal responsibility as a passport to voters’ trust but he also thinks the Tories are deluding themselves if they think Britain will choose its next government based on who is better at inflicting austerity.
The question that then arises is whether the policies that the opposition has offered so far – house-building; the energy price freeze; the new banking market shake-up; regional industrial policy – look like the start of a convincing prescription for the kind of systemic post-crisis reform that Miliband insists is necessary. At least if the debate starts to focus on that challenge, in those terms, progress will have been made in changing the way the test of "economic credibility" is applied, moving on from Osborne’s fiscal dividing lines. That would be quite a result for the Labour leader.