Ed Miliband speaks at Senate House on November 13, 2014 in London. Photograph: Getty Images.
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Miliband confronts Labour's deficit problem and opens new dividing line on the state

Labour leader attacks the Conservatives' plan for "a dramatic shrinking of the state and public services" to 1930s levels. 

Ed Miliband's speech at this year's Labour conference is best remembered for his failure to mention the deficit. His amnesia served to magnify a bigger problem: that the party hasn't come close to regaining the economic credibility it lost during the crash.

Despite George Osborne's multiple failures (the deficit is forecast to be £91bn this year, £54bn higher than promised in 2010) the Tories' lead as the best custodians of the public finances has grown, rather than shrunk. Shadow cabinet ministers fear that Labour's inability to win back economic trust is obscuring Miliband's promise of a better tomorrow. As long as voters doubt the party's competence, they won't believe in its ability to raise stagnant living standards. While Labour has bound itself to fiscal rectitude by pledging to eliminate the current account deficit by the end of the next parliament and to reduce the national debt as share of GDP, many have long believed that this message will only gain credence when it is delivered prominently by the leader. 

Miliband's address tomorrow morning in London is aimed at answering these criticisms. Having failed to mention the deficit once in Manchester, he is now devoting a whole speech to the subject - the first time he has done so. He will say: "My speech today is about the deficit. Its place in our priorities, how a Labour government would deal with it, and how we would do so consistent with our values." Miliband will go on to declare that those who think "the deficit simply doesn’t matter to our mission and should not be our concern" are "wrong". He will warn that "unless there is a strategy for dealing with the deficit, it is working people who will end up paying the price of the economic instability that is created. It is also necessary for funding our public services because higher debt interest payments squeeze out money for those services and for investment in the long-term potential of our country. 

"There is no path to growth and prosperity for working people which does not tackle the deficit. What we need is a balanced approach which deals with the deficit - but does so sensibly."

His aim is to convince voters that Labour wll reduce the deficit but will do so in a different and better way than the Tories. Rather than relying on cuts alone, the party will also impose new tax rises on the wealthy and will stimulate growth and wages in order to raise flagging Treasury receipts. The party cites the slump in tax revenues owing to inadequate pay as a vindication of its economic analysis. A Labour strategist told me that reducing the deficit and solving the "cost-of-living crisis" were "not separate projects, but the same project".

The speech will be welcomed by the party's deficit hawks although some will question why such an intervention wasn't made earlier in the parliamentary cycle. Others on the left are likely to complain that by devoting an entire speech to the issue, Miliband is reinforcing George Osborne's frame of choice. 

To underline Labour's commitment to fiscal responsibility, Ed Balls has written to all shadow cabinet ministers warning those responsible for unprotected areas (everything excluding the NHS and international development) that "you should be planning on the basis that your departmental budgets will be cut not only in 2015/16, but each year until we have achieved our promise to balance the books": his grimmest statement yet of the lean times ahead for Whitehall. Balls promises, however, that "We will set out for our manifesto other priority areas of spending which will be protected" (schools are one likely candidate). 

Alive to the danger of appearing to embrace Conservative-style austerity, as Labour sheds left-wing voters to the Greens and the SNP, Miliband will also carve a new dividing line with Osborne. Following the OBR's forecast that public spending will fall to just 35.2 per cent of GDP by 2019-20, the lowest level since the 1930s, he will rule out ever making cuts of this scale. 

In an ironic allusion to his alleged minimalist electoral strategy, he will declare: "There is only one 35 per cent strategy in British politics today: the Tory plan for cutting back the state and spending on services to little more than a third of national income." The Tories' plan to continue cutting even once the deficit has been eliminated has given Labour the opening it needs to accuse them of an ideological drive to shrink the state. One strategist told me that the Conservatives were now in "a dangerous place". 

Miliband will say: "They have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all - but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences."

"They are doing it, not because they have to do it, but because they want to. That is not our programme, that will never be our programme, and I do not believe it is the programme the British people want.

"This is a recipe for public services that will disintegrate and for a permanent cost of living crisis because we won’t be investing in the skills and education people need for good quality jobs, and indeed for sufficient tax revenues. And we know what the result will be: the Tories might be able to deliver the cuts they have promised, but they won’t be able to cut the deficit as they promised."

Miliband will outline the "five principles" that will guide Labour's alternative approach to the deficit: "These are the principles of deficit reduction a Labour government will follow: balancing the current budget, not destroying productive investment; an economic strategy to bring the deficit down, not drive it up; sensible reductions in spending, not slash and burn of our public services; the wealthiest bearing the biggest burden, not everyday people; and fully funded commitments, without additional borrowing, not unfunded tax cuts that put our NHS at risk."

The Tories have long sought to create a narrative of risk around a future Labour government by warning that the opposition would "crash the car again". By warning of the consequences for public services of another Conservative-led government, Miliband aims to construct a centre-left equivalent. The defining passage of his speech tomorrow is his declaration that "We will deal with the deficit but we will never return to the 1930s. We won’t take risks with our public finances. And we won’t take risks either with our public services, our National Health Service." 

The Conservatives' aggressive response to the BBC's coverage of the Autumn Statement revealed the extent to which they fear that the cuts to come could jeopardise their election chances. Osborne and other senior Tories partly blame their failure to win a majority on his "age of austerity" conference speech in 2009, which triggered a poll slump from which they never recovered. Labour was able to win back support as it warned of cuts to tax credits, reductions in child benefit, Sure Start closures and a rise in VAT (all denied by the Tories during the campaign only to be introduced immediately afterwards). By warning of the threat now posed to the NHS and to schools by a return to levels of public spending that existed before the creation of the welfare state in 1945, Miliband is attempting to do the same. It is a powerful frame that he is likely to return to repeatedly before the election (although some will attack it as a repeat of the "good cuts vs. bad cuts" strategy that Gordon Brown felt trapped by in 2010). 

A Labour aide promised that there would be new announcements in the speech tomorrow. Whether they are on protecting public services or on cutting deficit will reveal much about the message that Miliband wants to take priority. 

George Eaton is political editor of the New Statesman.

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Commons Confidential: Dave's picnic with Dacre

Revenge is a dish best served cold from a wicker hamper.

Sulking David Cameron can’t forgive the Daily Mail editor, Paul Dacre, for his role in his downfall. The unrelenting hostility of the self-appointed voice of Middle England to the Remain cause felt pivotal to the defeat. So, what a glorious coincidence it was that they found themselves picnicking a couple of motors apart before England beat Scotland at Twickenham. My snout recalled Cameron studiously peering in the opposite direction. On Dacre’s face was the smile of an assassin. Revenge is a dish best served cold from a wicker hamper.

The good news is that since Jeremy Corbyn let Theresa May off the Budget hook at Prime Minister’s Questions, most of his MPs no longer hate him. The bad news is that many now openly express their pity. It is whispered that Corbyn’s office made it clear that he didn’t wish to sit next to Tony Blair at the unveiling of the Iraq and Afghanistan war memorial in London. His desire for distance was probably reciprocated, as Comrade Corbyn wanted Brigadier Blair to be charged with war crimes. Fighting old battles is easier than beating the Tories.

Brexit is a ticket to travel. The Independent Parliamentary Standards Authority is lifting its three-trip cap on funded journeys to Europe for MPs. The idea of paying for as many cross-Channel visits as a politician can enjoy reminds me of Denis MacShane. Under the old limits, he ended up in the clink for fiddling accounts to fund his Continental missionary work. If the new rule was applied retrospectively, perhaps the former Labour minister should be entitled to get his seat back and compensation?

The word in Ukip is that Paul Nuttall, OBE VC KG – the ridiculed former Premier League professional footballer and England 1966 World Cup winner – has cold feet after his Stoke mauling about standing in a by-election in Leigh (assuming that Andy Burnham is elected mayor of Greater Manchester in May). The electorate already knows his Walter Mitty act too well.

A senior Labour MP, who demanded anonymity, revealed that she had received a letter after Leicester’s Keith Vaz paid men to entertain him. Vaz had posed as Jim the washing machine man. Why, asked the complainant, wasn’t this second job listed in the register of members’ interests? She’s avoiding writing a reply.

Years ago, this column unearthed and ridiculed the early journalism of George Osborne, who must be the least qualified newspaper editor in history. The cabinet lackey Ben “Selwyn” Gummer’s feeble intervention in the Osborne debate has put him on our radar. We are now watching him and will be reporting back. My snouts are already unearthing interesting information.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution