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Why Miliband is sticking to his "cost-of-living" attack

A few months of wage rises won't be enough to repair the severed link between growth and earnings for most. 

For months, Ed Miliband's focus on living standards has allowed Labour to dominate the political agenda. But with wages soon likely to outstrip prices (average wage increases currently stand at 1.4 per cent against inflation of 1.7 per cent), many outside and some inside of the party argue that he will have to change tack. Just as the return of growth forced the abandonment of Labour's "too far, too fast" attack on the cuts, so, they argue, the return of pay rises will repel its "cost-of-living" offensive. 

But in an article in today's Independent, the day before what sources suggest will be a major speech on the economy, Miliband outlines why he's not about to stop banging on about living standards. While wages may finally be about to creep above inflation, after falling for five consecutive years, he warns that this won't be enough to repair the severed link between growth and earnings: 

Until the 1990s, for every percentage point increase in economic growth, wages for middle-income Britain grew by an almost identical amount. That no longer holds true because the link between growth and the living standards of middle Britain has been broken.

Office for Budget Responsibility forecasts for the next four years published at the Budget predict that real earnings will on average increase at only half the level of economic growth in 2015 and will still lag behind, even in 2018.

And even these figures mask the truth of what is happening to middle-income Britain. It is expected that wage rises will disproportionately benefit those at the top while some major costs, such as housing, which hits working families hardest, are not included in the official statistics. So any gains middle-income Britain gets as the economy picks up will be nothing compared with the scale of the crisis that remains or the assault on family finances of recent years.

Miliband’s team points to the pre-crash period, when incomes for millions of low-and middle-income earners stagnated even in times of strong growth, as evidence that the market can no longer be relied upon to deliver for the majority. In an economy as unequal as Britain’s, any gains quickly flow to the top. Based on the RPI measure of inflation (which includes housing costs), 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. 

In a riposte to George Osborne, who last week committed the Tories to seeking "full employment" (confusingly defined by Osborne as having more working age people in employment than any other G7 country), Miliband warns that this won't be enough if it merely means more low-paid, low-skilled, insecure jobs.

He writes: "The Chancellor is not only 70 years too late; he is also at least a decade out-of-date. Today, full employment – and getting people back to work – remains an absolutely necessary ambition but one that has become insufficient. People know that work no longer guarantees the better future for their families they used to expect. They are asking: what kind of work, what kind of wages – and what kind of prospects?" And warns: "This Government cannot deal with these problems because lying beneath its claims of being converted to full employment is an economic ideology built on low pay, low skills, low prospects and  low productivity."

The challenge for Miliband remains to convince voters not just that they're worse off under the Tories, but 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. 

In his article, Miliband cites his plans to reduce youth unemployment and increase skills (through the party's compulsory jobs guarantee), to crack down on exploitative zero-hour contracts, to spread use of the living wage, to cut business rates and to reform the banking sector to increase lending to SMEs. He also promises that Andrew Adonis's forthcoming growth review will outline how Labour will devolve power from Whitehall to cities and towns so that they become engines of growth, a line that will reassure those on the Cruddasite wing of the party seeking a firmer commitment to localism. 

What the piece lacks is the kind of retail offer that worked so well in the case of his energy price freeze. But that, one expects, may well come in tomorrow's speech. 

George Eaton is political editor of the New Statesman.

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Winning Scottish independence will be even harder than before - but it may be the only choice

Independence campaigners will have to find answers on borders, currency and more. 

The Brexit mutiny has taken not just the UK economy and its relationship with Europe into uncharted waters. it has also imperilled the union between Scotland and England. From Sir John Major to the First Minister, both Unionists and Nationalists had warned of it. The outcome, though, has made this certain. The Leave vote in England and Wales contrasted with an overwhelming Remain vote north of the border.

That every region in Scotland voted to stay In was quite remarkable. Historically, fishing and industrial communities have blamed the European Union for their woes. That antagonism was probably reflected in lower turnout - an abstention rather than a rejection. 

The talk now is of a second referendum on independence. This is understandable given the current mood. Opinion polls in the Sunday Times and Sunday Post showed a Yes vote now at 52 per cent and 59 per cent respectively. Moreover, anecdotal evidence suggests even arch No vote campaigners, from JK Rowling to the Daily Record, are considering the option.

The First Minister was therefore correct to say that a second referendum is now “back on the table”. Her core supporters expects no less. However, as with the economy and Europe, the constitutional relationship between Scotland and England is now in uncharted seas. Potential support for independence may be higher, but the challenges are arguably bigger than before. The difficulties are practical, political and geographic.

Of course the Little Englanders likely to take the helm may choose a velvet divorce. However, given their desire for the return of the Glories of Britannia that’s improbable. They’re as likely to wish to see Caledonia depart, as cede Gibraltar to Spain, even though that territory voted even more overwhelmingly In.

Ticking the legal boxes

Practically, there’s the obstacle of obtaining a legal and binding referendum. The past vote was based on the Edinburgh Agreement and legislation in Westminster and Holyrood. The First Minister has indicated the democratic arguments of the rights of the Scots. However, that’s unlikely to hold much sway. A right-wing centralist Spanish government has been willing to face down demands for autonomy in Catalonia. Would the newly-emboldened Great Britain be any different?

There are no doubt ways in which democratic public support can be sought. The Scottish Government may win backing in Holyrood from the Greens. However, consent for such action would need to be obtained from the Presiding Officer and the Lord Advocate, both of whom have a key role in legislation. These office holders have changed since the first referendum, where they were both more sympathetic and the legal basis clearer. 

Getting the EU on side

The political hurdles are, also, greater this time than before. Previously the arguments were over how and when Scotland could join the EU, although all accepted ultimately she could remain or become a member. This time the demand is that Scotland should remain and the rest of the UK can depart. But will that be possible? The political earthquake that erupted south of the Border has set tectonic plates shifting, not just in the British isles but across the European continent. The fear that a Brexit would empower dark forces in the EU may come to pass. Will the EU that the UK is about to leave be there for an independent Scotland to join? We cannot know, whatever European Commission President Jean-Claude Juncker may be saying at the moment. The First Minister is right to start engaging with Europe directly. But events such as elections in France and the Netherlands are outwith her control. 

Moreover, currency was the Achilles heel in the last referendum, and hasn’t yet been addressed. George Osborne was adamant in his rejection of a currency union. The options this time round, whether a separate Scottish currency or joining the euro, have yet to be properly explored. A worsened financial situation in the 27 remaining EU members hampers the latter and the former remains politically problematic. 

The problem of borders

Geography is also an obstacle  that will be even harder to address now than before. Scotland can change its constitution, but it cannot alter its location on a shared island. In 2014, the independence argument was simply about changing the political union. Other unions, whether monarchy or social, would remain untouched. The island would remain seamless, without border posts. An independent Scotland, whether in or out of the EU, would almost certainly have to face these issues. That is a significant change from before, and the effect on public opinion unknown.

The risk that's worth it

Ultimately, the bar for a Yes vote may be higher, but the Scots may still be prepared to jump it. As with Ireland in 1920, facing any risk may be better than remaining in the British realm. Boris Johnson as Prime Minister would certainly encourage that. 

David Cameron's lack of sensitivity after the independence referendum fuelled the Scottish National Party surge. But perhaps this time, the new Government will be magnanimous towards Scotland and move to federalism. The Nordic Union offers an example to be explored. Left-wing commentators have called for a progressive alliance to remove the Tories and offer a multi-option referendum on Scotland’s constitution. But that is dependent on SNP and Labour being prepared to work together, and win the debate in England and Wales.

So, Indy Ref The Sequel is on the table. It won’t be the same as the first, and it will be more challenging. But, if there is no plausible alternative, Scots may consider it the only option.

Kenny MacAskill served as a Scottish National MSP between 2007 and 2016, and as Cabinet Secretary for Justice between 2007 and 2014.