Ed Miliband visits Standard Life on November, 11, 2013 in Edinburgh. Photograph: Getty Images.
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Miliband ties Salmond to Cameron in attack on "race to the bottom"

The Labour leader uses the Scottish First Minister's weapon of choice against him.

If the Union is to survive, it will be up to Labour save it. With just one MP in Scotland (out of a possible 59), the Conservatives recognise that they cannot speak with authority on the country's future. By contrast, even in the baleful circumstances of the 2010 general election, Labour held onto all 41 of its seats north of the border (indeed, its vote actually rose by 2.5 per cent). With the Lib Dems' support in freefall owing to their decision to enter coalition with the Tories (the psephologist Lewis Baston recently predicted that they would lose all but one of their 11 Scottish constituencies), Labour is now the only one of the three main Westminster parties that can credibly challenge the SNP.

For this reason, Ed Miliband and his team recognise that the independence referendum is a significant political opportunity for him. With David Cameron publicly conceding that he lacks appeal in Scotland, Miliband can step forward as the man to prevent the break-up of Britain. 

It is this that he will do in a speech at the Scottish Labour conference today. When Alex Salmond delivered his New Statesman lecture earlier this month, he argued that Scotland could serve as a "progressive beacon" for the rest of the UK by pursuing the kind of social democratic policies shunned by Westminster. But in his address, Miliband will turn this argument on its head by declaring that rather than leading a "race to the top", the SNP would trigger a "race to the bottom". While Labour has pledged to increase corporation tax from 20 per cent to 21 per cent in order to fund a reduction in business rates for small firms, Salmond has vowed to reduce it to 3 per cent below the British level. Alongside this, he has refused to match Miliband's commitment to reintroduce the 50p tax rate (see his response to my question at the NS event) on the grounds that it could undermine Scotland's competitiveness. 

In recent weeks, Salmond has sought to present Labour as Tory stooges after they joined forces with George Osborne against a currency union. But Miliband will use the First Minister's weapon of choice against him by arguing that his stance on tax means he would join David Cameron in a "race to the bottom". Here's the key extract: 

Think how hard it would be to stop a race to the bottom happening if, on one island, we had a border running along the middle so we were divided in two. It would be two lanes in a race to the bottom - with David Cameron and Alex Salmond at the starting blocks - in which the only way they win is for you to lose.

If Scotland was to go independent, it would be a race to the bottom not just on tax rates, but on wage rates, on terms and conditions, on zero hours contracts, on taking on the energy companies, on reforming the banks. Those who can afford it will be paying less, while hardworking families across Scotland will pay more and see their services suffer.

Alex Salmond who claims to be a great social democrat would end up running the same race to the bottom that the Tories have embarked upon. The SNP talk about social justice but they can’t build it - because they can’t be narrow nationalists and serve social justice at the same time.

While Salmond will point to his stances on welfare, inequality and foreign policy as evidence of his commitment to a centre-left agenda, the problem he faces is that Miliband has embraced such policies himself. He has pledged to scrap the bedroom tax (which, like the Poll Tax, has become a symbol of Conservative callousness in Scotland), to reverse the privatisation of the NHS, to invest more in early-years education and childcare, to spread the use of the living wage, to rebalance the economy and to increase infrastructure spending. He has condemned the invasion of Iraq (which so alienated progressives in Scotland and elsewhere), prevented a rush to war in Syria and pledged to pursue a foreign policy based on "values, not alliances". Finally, he has denounced the rise in income inequality (which, as Salmond rightly laments, has made the UK one of "the most unequal societies in the developed world"), and has made its reversal his defining mission.

The core argument he will make today is that if the UK elects a Labour government next May, it won't need Scotland to serve as a "progressive beacon". Rather, it will become a more progressive country through its own means. 

The SNP want to tell you that there is a progressive Scotland and a Tory England. There isn’t. There are millions of people across every part of our country who want a better future for all our young people; who say it is just wrong that so many people in work find themselves in poverty, who want to be part of a country that is more just, more equal, more fair.

Let’s rebuild all of o‎ur country in the cause of social justice. Together, not alone; as neighbours on this island, not as strangers; as friends, not as competitors; in a race to the top, not to the bottom.

 Two decades on from the death of John Smith (whose wife recently made a rare intervention in support of Miliband's party reforms), he will also call on Labour to honour his legacy by successfully defending the Union. 

John Smith was a man who passionately believed in social justice in Scotland - and in the United Kingdom.  Twenty years on, that flame of social justice still burns. And we can honour his legacy by winning the fight for Scotland to remain in the United Kingdom.

In addition, according to Labour, he will "talk about his own family’s links to Scotland which saw his father train in the Royal Navy during the Second World War at Inverkeithing."  

For obvious reasons, it is Miliband, far more than Cameron, who has a political interest in the Union enduring. While the belief that an independent Scotland would consign the rest of the UK to permanent Conservative rule is exaggerated (on no occasion since 1945 would independence have changed the identity of the winning party and on only two occasions would it have converted a Labour majority into a hung parliament), the loss of 41 MPs would make it far harder for Labour to achieve majorities in the future. 

Were a Labour (or Lab-Lib Dem) government to be formed on the basis of support from MPs north of the border, the right-wing media and many Tories would denounce it as an illegitimate imposition on the rest of the UK. Miliband, meanwhile, would face the prospect of losing his majority less than a year after becoming prime minister. As a Labour MP recently put it to me, "If we lose Scotland, we could be completely buggered." 

With the polls narrowing significantly, Miliband will hope that today marks the start of the fightback. 

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.