Osborne's minimum wage move is a huge political opportunity for Labour

By conceding that a large rise would not cost jobs or damage the public finances, Osborne has made it harder for the Tories to credibly oppose a more radical offer from Miliband.

Margaret Thatcher memorably described New Labour as her "greatest achievement". In the same spirit, Labour can greet George Osborne's announcement that he favours "above-inflation increases" in the minimum wage as a remarkable act of political flattery. When Tony Blair and Gordon Brown introduced the policy in 1999, the Tories rejected it as a jobs killer; they are now competing with Labour to promise the biggest rise. There is no better example of how Miliband's party has shifted the centre ground to the left. 

But in both its content and its timing (the day before Miliband's long-trailed speech on the economy this morning), Osborne's gambit is uncomfortable for Labour. It is a reminder of the biggest advantage that a government has over the opposition: while the latter can only talk, it can act. But Osborne's move also opens up new political opportunities for Labour. If the Tories want to enter a bidding war with the opposition on living standards, Labour should be confident that it is one it can win.

Having shifted from denying the living standards crisis to seeking solutions to it (while attempting to blame the last government), it will become harder for the Tories to fend off reminders of how much ground has been lost since 2010 (with the average family, as Labour never lets us forget, £1,600 a year worse off). After the biggest fall in real wages under any government in recorded history and the retoxification of the Conservative brand through the abolition of the 50p tax rate , the danger for the Tories is that a rise in the minimum wage just looks like crumbs from the table. While the Conservatives enjoy a convincing poll lead on the economy, they have long trailed Labour as the party that would do most to improve family incomes. Osborne's announcement might have left the Tories in a better position than before, but they will still struggle to win an election defined by living standards. A tactical victory could become a strategic defeat. 

By conceding that a rise in the minimum wage (which has fallen back to its 2004 level) would not cost jobs and would have a neutral effect on the public finances (with the anticipated fall in corporate tax receipts offset by higher income tax receipts and lower benefits), Osborne has also made it harder for the Tories to oppose a more radical offer from Labour. Many on the left would like Miliband to respond by pledging to introduce a universal living wage, which would see the minimum wage rise from £6.31 to £7.65 in the UK and £8.80 in London. But with respected forecasters such as NIESR estimating that such a move would reduce labour demand by 160,000 jobs, the equivalent of a 0.5% rise in unemployment, this remains unlikely (although a poll last year found that 60% support a universal living wage even if it costs jobs).

It's worth remembering, however, that Labour has already gone further than any of the other main parties by suggesting that it should become compulsory for all public sector contractors and government departments to pay the living wage and by promising tax incentives for private sector employers to do so. When Miliband announced his plan last November, the Tories responded by claiming, with no accompanying evidence, that the policy was "unworkable" and would have "a substantial extra cost to the Exchequer". But after Osborne's embrace of higher wages, such stock lines will be less convincing than ever. If Labour outlines a plan that is both credible and radical, and that the Tories, for ideological reasons, are unable to support, the Chancellor may well regret playing on Miliband's pitch. 

George Osborne delivering his speech on EU reform in London on Wednesday. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Justin Tallis/Getty Images
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What does our latest poll mean for the Labour leadership race?

Jeremy Corbyn is ahead among councillors - and looks ever more certain to become Labour's next leader. 

This morning the Labour History Research Unit at Anglia Ruskin University released its last set of polling data of Labour councillors in marginal constituencies’ prior to the election of the new leader.

It’s certainly a limited enough snapshot but in broad terms the data suggests four things. Firstly, that Jeremy Corbyn will win the leadership. Perhaps no great shock there at this point. But Corbyn’s slight lead in our poll of only two points or under above Yvette Cooper and Andy Burnham masks the fact that he has picked up over 11 per cent of councillors since June - whilst all other candidates have lost support here. Given his reputation as a centraliser, it is remarkable that Corbyn is also neck and neck with Andy Burnham as the candidate councillors believe ‘would be best for local government.’ If he’s just about won over this tough crowd it may indeed be game over.

Secondly, the £3 registered supporter experiment is viewed as a damaging one by many within the party. With almost six in ten councillors thinking it should be ‘scrapped ahead of any future contest’ compared to just over one in four seeing it as a positive, there may well be clamour to reform this model going forward. Whether Corbyn will want to challenge the legitimacy of a reasonable proportion of his backers is one thing, but he would likely have some support in doing so if others were to press the issue.

Thirdly, on whatever mandate Corbyn is elected the good news for him is that key councillors clearly back Corbynomics. His plan to create a regulated and publicly-run service to deliver energy supplies is backed by 78 per cent of councillors who either “strongly agree” or “agree” with the policy, while 77 per cent support nationalising the railway network as soon as practicable. Introducing a 50p top rate of income tax is backed by 79 per cent of councillors, while 73 per cent agree with a “mansion tax” on homes worth over £2million. Most of those individually poll well amongst the electorate, though the 75 per cent of councillors who think scrapping tuition fees would aid the Labour vote in their constituency are out of kilter with the only one in six members of the general public who support that measure.

But lastly, perhaps most crucially, the rub is that less than two in ten councillors surveyed think Jeremy Corbyn will win the 2020 General Election. Even amongst councillors pledging to vote for Corbyn that figure tops out at six in ten.

Our data aside, Corbyn’s medium term challenge will clearly be enormous, as they would be for any new leader. For one, Labour’s current core vote just doesn’t turnout in enough numbers – not only in terms of voting for Labour, but at all. In 2010 and 2015 Labour’s most successful demographics were the semi-/low skilled working class (40 per cent to 31 per cent over the Tories in 2010, 41 per cent to 27 per cent in 2015) and ethnic minorities (60 per cent to 16 per cent in 2010, 65 per cent to 23 per cent in 2015). Turnout for both these groups is at least one in ten less than the national average, and barely bobs over one voter in two generally.  

Instead, in 2015 the most likely people to vote were men over the age of 55 (79 per cent), the middle class (75 per cent), or property owners (77 per cent). And so Jon Cruddas’ reviews’ conclusion that Labour has fallen behind on the average Prospector vote – those who ‘vote pragmatically for whichever party they think will improve their financial circumstances’ – has much resonance. The grey middle class might not be the sexiest of demographics, but they often decide elections. Miliband may have gained 12 per cent more 18-24 year olds (turnout 43 per cent) in 2015 than five years earlier, but the fact that he managed to do 8 per cent worse than Gordon Brown’s 2010 performance with the crucial over 65s (turnout 78 per cent) put the final chisel in the Edstone.

Perhaps if you give young voters a “radical alternative” they really will turn out – though worth recording that turnout amongst under 25s at the ‘real choice’ election of 1979 was the lowest either side of the majority Labour governments of 1966 and 1997 – but there are no guarantees. All this is a challenge for Labour per se however, not just Corbyn.

For the bookies’ favourite himself there are some specific complications. Big ticket policies like People’s Quantitative Easing have been queried by fellow leadership candidates (to declare an interest, while I am a Kendallite, I wrote a report arguing for a much truncated, one-off form of People’s QE in 2012), though it is just about backed by councillors in our survey. Corbyn’s foreign policy choices of threatening to leave NATO (rejected by two thirds of councillors) and scrapping Trident (rejected by a third) are also likely to be controversial. And the sum total of a left leaning agenda – as Ed Miliband discovered – is often less than its constituent parts. If Jeremy Corbyn is going to become the first opposition leader since 1906 to gain a full parliamentary majority whilst pledging to raise the top rate of income tax, he’s got a lot of work to do.

But our survey suggests that he’ll get the time to do it. If our data suggests Corbyn is at present unlikely to be Prime Minister, for all the talk of an early coup against him, he looks in a strong position to at least contest that election. And that remains an astonishing rise.

Richard Carr is a Lecturer in History at the Labour History Research Unit (LHRU), Anglia Ruskin University. The LHRU has today released new polling data on the Labour leadership. The views expressed in this article are not necessarily those of the LHRU, the kind councillors of all parties who took time to answer the survey, or Anglia Ruskin University.

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