Stuck on a burning platform – and with no money to give away – Labour is turning radical

In an age of fiscal famine, the tax and spend policies of the past are no longer an option.

In an age of fiscal famine, the tax and spend policies of the past are no longer an option.
Ed Miliband speaks at the Scottish Labour conference on March 21, 2014 in Perth. Photograph: Getty Images.

When Conservative focus groups were asked before the last general election to select the picture that best represented Labour, they typically chose one of a lazy slob guzzling a beer while watching daytime TV. Four years later, the image persists. Lord Ashcroft’s new focus groups in Thurrock (Labour’s number two target seat) and Halifax found that this indolent character is still thought to epitomise the party. “Labour encourage that kind of behaviour. They make it too easy for people not to work and earn their money,” said one voter.

It is a charge that stings. The frequency with which shadow cabinet ministers assert that Labour is the “party of work” is testimony to how successful the Tories have been in branding it as the “party of welfare”. Ed Miliband’s own pollster James Morris told a Trades Union Congress meeting last year: “The challenge is very severe . . . if you look at politically salient target groups, those numbers get worse.” For those who celebrate Labour as the party of the Beveridge settlement, it is an unsettling reality. “If you’d said at the beginning of this parliament that the Tories would lead us on welfare, you would have been put in a straitjacket,” Labour’s former social security minister Frank Field told me.

Miliband’s speech on 19 June to mark IPPR’s Condition of Britain report was an attempt to turn this political supertanker around. He announced that Labour would abolish Jobseeker’s Allowance for 18-to-21-year-olds without Level 3 qualifications and replace it with a means-tested youth allowance conditional on recipients being in training. There would be winners from the policy: those who spend over 16 hours a week in further education would no longer be denied state support. There would also be losers. With the exception of some vulnerable groups, it would no longer be possible for school leavers to start their adult lives on benefits.

Labour strategists regarded Miliband’s address as an opportunity to change the conversation after a week defined by the fallout from his promotion of the Sun’s World Cup edition, Tony Blair’s bellicose pronouncements on the Middle East and ill-disguised tensions among shadow cabinet members. After Monday’s regular meeting of the Parliamentary Labour Party, Harriet Harman was heard to berate Douglas Alexander over the lack of women in Labour’s inner circle.

In these moments of drift, anxiety spreads about the likely outcome in May 2015. One Labour MP told me this week that he expects the Conservatives to win a majority of 10-20 seats. Few in Westminster regard that as conceivable, but it is a sign of how pessimism has entered the party’s bloodstream.

IPPR’s Condition of Britain report, consciously modelled on its influential 1994 Commission on Social Justice, had been 18 months in the making. But rarely had Miliband needed its message of national renewal more. After nearly a year spent lamenting the “cost-of-living-crisis”, with what many fear are diminishing returns, the Labour leader has begun to shift gears.

Confronted by the prospect of another parliament of austerity, the party is becoming more, rather than less, radical. Labour's policy review co-ordinator, Jon Cruddas, cites the “Burning Platform” email sent to Nokia staff in 2011 by the company’s then chief executive, Stephen Elop. Elop wrote of a man who woke to find the oil platform he was sleeping on engulfed in flames. In desperation, he jumped 30 metres into the freezing waters below. After his rescue, he reflected how the fire had caused him to act in a way he never previously thought possible. Faced with the “burning platform” of a £107bn budget deficit, Labour, too, is changing.

In an age of fiscal famine, the tax and spend policies of the past are no longer an option. To deliver progressive reforms, the state itself will need to change. In the next month, Andrew Adonis’s growth review for the party and the final report of the Local Government Innovation Taskforce will propose the biggest devolution of power in England for more than a century. Miliband has already committed Labour to transferring £20bn of funding to local councils, but Cruddas’s outriders are hopeful the final figure will be closer to £70bn. Responsibility for housing benefit, transport infrastructure, the Work Programme, and apprenticeships and skills will be delegated entirely to city and county regions. When Leviathan’s coffers run dry, the one thing that Labour can afford to give away is power.

If Labour’s problem is that it is viewed as the party of welfare, the Tories’ is that they are viewed as the party of the wealthy. In his conversation with the Miliband strategist and Labour peer Stewart Wood at parliament this week, the pin-up economist Thomas Piketty noted that the coalition government had introduced a super-rate of stamp duty on properties worth more than £2m. It has also raised capital gains tax from 20 per cent to 28 per cent and retained a top rate of income tax higher than that seen for all but one of New Labour’s 156 months in office. But, like Gordon Brown, on those occasions when he has redistributed, George Osborne has done so by stealth. The Tories missed their chance for a “Clause IV moment” on inequality when David Cameron vetoed a mansion tax on the grounds that “our donors will never put up with it”.

Both Labour and the Tories present themselves as parties for “the many, not the few”. But the voters have never been less convinced. An ICM poll on 17 June put combined support for the two parties at just 63 per cent (32 per cent and 31 per cent) – the lowest recorded figure in ICM’s history. Unless one is able to break the deadlock, the danger is that the country, like a lazy slob on the sofa, will be condemned to drift and decline.