Ed Miliband delivers his speech on the EU at the London Business School on March 12, 2014. Photograph: Getty Images.
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Why Ed Miliband is set to declare war on inequality

The Labour leader is increasingly convinced not just of the moral and economic case for tackling inequality but also of the political case for doing so.

In 1964, Lyndon Johnson told the US Congress: “This administration today, here and now, declares unconditional war on poverty in America.” Fifty years later, Ed Miliband is set to declare his own war - on inequality. More than ever, the Labour leader is convinced that the widening chasm between the rich and the rest (revealed again today by Oxfam) is the defining issue of our time.

In the years before the crash, inequality was dismissed as a left-wing talking point, redolent of the “politics of envy” and inimical to middle class “aspiration”. Incomes might have been rising faster at the top than at the bottom but all, it was thought, were sharing in the fruits of seemingly permanent growth. Tony Blair captured the spirit of the age when he declared that he didn’t go into politics “to make sure that David Beckham earns less money”. But the financial crisis and the uneven nature of the recovery that has followed mean that, as Miliband declared in his Hugo Young Lecture last month, “tackling inequality is the new centre ground of politics”.

When he made the issue a defining theme of his Labour leadership campaign in 2010, it was viewed as a radical challenge to the Westminster consensus. But three and a half years later, Miliband can pray in aid an impressive array of political and intellectual figures. In the US, where 95 per cent of the rise in national income between 2009 and 2012 was captured by the top 1 per cent, Barack Obama has spoken repeatedly of the need to narrow the gap between the rich and the poor (a departure from the bland US emphasis on widening “opportunity”) and radical Democrat Bill de Blasio won a landslide victory in the New York mayoral election after vowing to address “the crisis of income inequality”. For Miliband and his strategists, such figures are crucial evidence of his claim that the tide is flowing in the left's direction. 

Over the same period, Pope Francis has warned that “inequality is the root of social ills”; Conservatives such as Jesse Norman, David Skelton, Robert Halfon and Sarah Wollaston have urged their party to reject libertarian individualism in favour of a Burkean commitment to social justice; and the World Economic Forum and the IMF have identified inequality as one of the greatest threats to future prosperity. From supposedly being a left-wing obsession, the income gap has become a political obsession.

Miliband, more than most, can claim to have been ahead of the curve. Since rising to political prominence, he has consistently argued that progressive governments have both a moral and an economic duty to limit inequality. As he wrote in a piece for the New Statesman on The Spirit Level in August 2010, "We, politicians and the public, have to decide what kind of society we want to live in, and whether the difficult task of greater equality is worth the candle. It is - and it is at the very heart of why we need to move on from New Labour. During our years in power, we didn't do enough to stop the gap between rich and poor getting wider. If you really believe in a society where there is social mobility, where we look after each other, where we build social solidarity, then the gap matters."

He is now increasingly convinced not just of the moral and economic case for tackling inequality but also of the political case for doing so. If it was once thought that parties couldn’t afford to talk about the gap for fear of alienating aspirational centrists, Miliband believes that they can’t afford not to. Polls show that as many as 80 per cent of voters believe the government has a duty to reduce inequality, while measures designed to do so attract overwhelming support. As I’ve noted before, if Miliband is a “socialist”, so are most of the public. Around two-thirds of voters support a 50p tax rate, a mansion tax, stronger workers’ rights, a compulsory living wage and the renationalisation of the railways and the privatised utilities (putting them to the left of the Labour leader).

The political success of his emphasis on the “cost-of-living” (regarded by Labour strategists as a “proxy” for inequality) is due in large part to his recognition that this is a recovery “for the few, not the many”. While avoiding appearing to deny that growth has returned, he can complain at how unfairly its fruits have been distributed. Britain today is a country in which, for the first time ever, there are more people from working families living in poverty (6.7 million) than from workless and retired ones (6.3 million). When Miliband delivers his response to George Osborne's Budget on Wednesday, it is these failures that he will target. 

The traditional political objection to progressive taxation was that it would repel the middle class voters who dreamt of one day joining the ranks of the rich. But even were this once true, few now entertain such ambitions after years of falling wages. The living standards crisis, with 11 million low and middle income workers seeing no rise in their earnings since 2003, has created the potential for a cross-class coalition of the 99 per cent against the 1 per cent (who now account for more than 14 per cent of all income).

Miliband will vow to address inequality through a combination of redistribution - the 50p tax rate, a mansion tax, a bank bonus tax, a major crackdown on tax avoidance (a subject which I'm told he will soon address in detail), the repeal of the bedroom tax, a less punitive benefit cap - and predistribution (seeking to create more equal outcomes before the government collects taxes and pays out benefits) - universal childcare, a mass housebuilding programme, the energy price freeze, a higher minimum wage, greater use of the living wage and worker representation on remuneration committees. 

The long-term question for Miliband, if he wins office, and for all British progressives is how much of a difference all of this would make. In his new book Capital in the 21st Century (recently highlighted by Miliband strategist Stewart Wood), economist Thomas Piketty warns that, contrary to mainstream left and right assumptions, widening inequality is an innate feature of modern capitalism (one temporarily masked by the atypical post-war period) and will be only be curbed through a global wealth tax. On a domestic level, he argues, top rates of income tax should return to their pre-neoliberal levels of 70-80 per cent. 

But if there is little prospect of Labour's election manifesto making room for such policies (and many economists reject Piketty's pessimistic assumptions), it is clear that Miliband will still offer the most comprehensive programme for tackling inequality of any political leader for a generation. 

There was once a time when David Cameron was prepared to acknowledge the gap between the rich and poor and its baleful effects.  In his 2009 Hugo Young Memorial Lecture he noted:

Research by Richard Wilkson and Katie Pickett has shown that among the richest countries, it's the more unequal ones that do worse according to almost every quality of life indicator. In "The Spirit Level", they show that per capita GDP is much less significant for a country's life expectancy, crime levels, literacy and health than the size of the gap between the richest and poorest in the population. So the best indicator of a country's rank on these measures of general well-being is not the difference in wealth between them, but the difference in wealth within them.

But he has since reverted to Thatcherite type, treating the size of the gap between the rich and the poor as an irrelevance and offering only a more elegant version of Norman Tebbit's "get on your bike". "You’ve got to get out there and find people, win them over, get them to raise aspirations and get them to think that they can get all the way to the top," he said recently. The political field has been left open to Miliband. 

In the days following the death of Tony Benn, many have remarked on how distant the debates that defined his era now appear. But the chasm that separates Miliband's stance on inequality from that of Cameron is the strongest evidence yet of why the next election will be defined by precisely the kind of big choices that have for so long been absent from British politics. 

George Eaton is political editor of the New Statesman.

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump