Ed Miliband delivers his speech on banking reform in London on January 17, 2014. Photograph: Getty Images.
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Why Miliband is right to keep banging on about living standards

Voters will still be worse off in 2015 than in 2010 - Labour's "cost-of-living" strategy remains its best hope of victory.

Ed Miliband needs to find a new script - that has been the response of most of Fleet Street to the Labour's leader Budget reply. Eight months after Miliband made the "cost-of-living" his party's defining theme (and years after he first used the phrase), commentators are desperate for him to change the subject. In part, this reflects the natural journalistic desire for novelty but it also reflects the belief that, with the economy recovering, this attack line has run its course. Yet for at least two reasons, Miliband (to invert David Cameron on Europe) is right to keep "banging on" about living standards. 

First, while the gap between average wages and prices has narrowed in recent months, real incomes are still declining. As the ONS figures published yesterday show, average weekly earnings rose by 1.4 per cent from November 2013 to January 2014, 0.5 per cent below the current rate of inflation. For most people, in other words, there is still no recovery at all. And in an economy as unequal as Britain's, the headline average (hugely inflated by high pay at the top) is an imperfect guide to living standards. Even after wages finally creep above inflation (as they are forecast to do this year), there will be no rise in real incomes for the millions of public sector workers who have had their salary increases capped at 1 per cent and for those most reliant on benefits. 

For the rest, after five years of falling living standards, it will take more than a few months of growth to make up the ground lost since the crisis. In 2015, as the IFS has repeatedly pointed out, real incomes will still be far below their 2010 level, with voters currently an average of £1,600 a year worse off. As Ed Balls noted at his post-Budget briefing yesterday, this will be the first time that living standards have ever been lower at the end of a parliament than at the start (paving the way for Miliband's "Reagan moment"). Indeed, based on the RPI measure of inflation, the OBR forecasts that wages will be flat until 2019; there will be plenty of people who feel no better off in the next decade, let alone in the next year. 

This leads to the second reason why Miliband is right to maintain his "cost-of-living" focus: voters believe Labour is most likely to make a difference. While the Tories enjoy a large lead as the best party to manage the economy and the deficit, Labour continues to lead as the party best-placed to improve living standards (with a five-point advantage in the most recent YouGov poll).

The key for Miliband is to shift political debate towards the latter and away from the former (as he did in his conference speech). It was this strategy that Barack Obama successfully deployed during his 2012 campaign. In meetings with the Labour team in London and Washington DC, Obama aides including his pollster Joel Benenson emphasised how important the president’s stance on living standards had been to victory in tough times. A report on the election by the veteran Democrat Stan Greenberg for Miliband pointed to polls showing that while Mitt Romney had led on "handling the economy"(51-44%) and "reducing the federal budget deficit" (51-37%), Obama had led on understanding "the economic problems ordinary people in this country are having" (51-43%) and on "looking out for the middle class" (51-40%). That Obama triumphed should not be surprising. As one Labour strategist told me, "for most voters, living standards are the economy". The Tories would like nothing more than for the opposition to stop talking about how voters are worse off than they were in 2010, which is precisely why it would be madness for Miliband to do so. 

If Labour is to win the election, it won't be enough to convince voters that they're poorer under the Conservatives. It will also need to convince them that they'd be better off under Labour. In the 2012 US election, Mitt Romney similarly resurrected Ronald Reagan's famous line - "Are you better off now than you were four years ago?" - but the electorate stuck with Obama because the numbers were moving in the right direction and they doubted Romney could do any better. The Tories hope and expect UK voters will take the same view of Labour in 2015. 

But the challenge for Miliband is continue to develop his party's offering on wages, jobs, housing and energy, not tear up the script entirely. Labour's "cost-of-living" strategy still represents his best hope of victory in 2015. 

George Eaton is political editor of the New Statesman.

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“We can’t do this again”: Labour conference reactions to Jeremy Corbyn’s second victory

Overjoyed members, determined allies and concerned MPs are divided on how to unite.

“I tell you what, I want to know who those 193,229 people are.” This was the reaction of one Labour member a few rows from the front of the stage, following the announcement of Jeremy Corbyn’s victory at the Labour party conference. She was referring to support received by his defeated contender, Owen Smith, who won 38.2 per cent of the vote (to Corbyn’s 61.8 per cent).

But it’s this focus on the leader’s critics – so vehement among many (and there are a lot of them) of his fans – that many politicians, of either side, who were watching his victory speech in the conference hall want to put an end to.

“It’s about unity and bringing us all together – I think that’s what has to come out of this,” says shadow cabinet member and MP for Edmonton Kate Osamor. “It shouldn’t be about the figures, and how many votes, and his percentage, because that will just cause more animosity.”

Osamor, who is supportive of Corbyn’s leadership, is not alone in urging her colleagues who resigned from the shadow cabinet to “remember the door is never shut”.

Shadow minister and member of Labour’s National Executive Committee (NEC) Jon Ashworth – not a Corbyn loyalist, but focusing on making the shadow cabinet work together – shares the sentiment.

Standing pensively in front of the now-empty stage, he tells me he backs shadow cabinet elections (though not for every post) – a change to party rules that has not yet been decided by the NEC. “[It] would be a good way of bringing people back,” he says. “I’ve been involved in discussions behind the scenes this week and I hope we can get some resolution on the issue.”

He adds: “Jeremy’s won, he has to recognise a number of people didn’t vote for him, so we’ve got to unite.”

The former Foreign Secretary Margaret Beckett, another MP on the NEC, is sitting in the audience, looking over some documents. She warns that “it’s impossible to tell” whether those who resigned from Corbyn’s shadow cabinet would be willing to return, and is concerned about talent being wasted.

“We have a lot of excellent people in the party; there are new people now in the shadow cabinet who have had a chance to show their mettle but you need experience as well as ability,” she says.

Beckett, who has urged Corbyn to stand down in the past, hopes “everybody’s listening” to his call for unity, but questions how that will be achieved.

“How much bad blood there is among people who were told that there was plotting [against Corbyn], it’s impossible to tell, but obviously that doesn’t make for a very good atmosphere,” she says. “But Jeremy says we’ll wipe the slate clean, so let’s hope everybody will wipe the slate clean.”

It doesn’t look that way yet. Socialist veteran Dennis Skinner is prowling around the party conference space outside the hall, barking with glee about Corbyn’s defeated foes. “He’s trebled the membership,” he cries. “A figure that Blair, Brown and Prescott could only dream about. On average there’s more than a thousand of them [new members] in every constituency. Right-wing members of the parliamentary Labour party need to get on board!”

A call that may go unheeded, with fervent Corbyn allies and critics alike already straying from the unity message. The shadow justice secretary Richard Burgon is reminding the PLP that, “Jeremy’s won by a bigger margin this time”, and telling journalists after the speech that he is “relaxed” about how the shadow cabinet is recruited (not a rallying cry for shadow cabinet elections).

“If Jeremy wants to hold out an olive branch to the PLP, work with MPs more closely, he has to look very seriously at that [shadow cabinet elections]; it’s gone to the NEC but no decision has been made,” says Louise Ellman, the Liverpool MP and transport committee chair who has been critical of Corbyn’s leadership. “That might not be the only way. I think he has to find a way of working with MPs, because we’re all elected by millions of people – the general public – and he seems to dismiss that.”

“If he sees it [his victory] as an endorsement of how he’s been operating up until now, the problems which led to the election being called will remain,” Ellman warns. “If we’re going to be a credible party of government, we’ve got to reach out to the general electorate. He didn’t say anything about that in his speech, but I hope that perhaps now he might feel more confident to be able to change direction.”

Corbyn may have called for cooperation, but his increased mandate (up from his last stonking victory with 59.5 per cent of the vote) is the starkest illustration yet of the gulf between his popularity in Parliament and among members.

The fact that one attempt at a ceasefire in the party’s civil war – by allowing MPs to vote for some shadow cabinet posts – is in contention suggests this gulf is in danger of increasing.

And then where could the party be this time next year? As Osamor warns: “We should not be looking at our differences, because when we do that, we end up thinking it’s a good thing to spend our summer having another contest. And we can’t. We can’t do this again.”

Anoosh Chakelian is deputy web editor at the New Statesman.