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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Erdogan’s purge was too big and too organised to be a mere reaction to the failed coup

There is a specific word for the melancholy of Istanbul. The city is suffering a mighty bout of something like hüzün at the moment. 

Even at the worst of times Istanbul is a beautiful city, and the Bosphorus is a remarkable stretch of sea. Turks get very irritated if you call it a river. They are right. The Bosphorus has a life and energy that a river could never equal. Spend five minutes watching the Bosphorus and you can understand why Orhan Pamuk, Turkey’s Nobel laureate for literature, became fixated by it as he grew up, tracking the movements of the ocean-going vessels, the warships and the freighters as they steamed between Asia and Europe.

I went to an Ottoman palace on the Asian side of the Bosphorus, waiting to interview the former prime minister Ahmet Davu­toglu. He was pushed out of office two months ago by President Recep Tayyip Erdogan when he appeared to be too wedded to the clauses in the Turkish constitution which say that the prime minister is the head of government and the president is a ceremonial head of state. Erdogan was happy with that when he was prime minister. But now he’s president, he wants to change the constitution. If Erdogan can win the vote in parliament he will, in effect, be rubber-stamping the reality he has created since he became president. In the days since the attempted coup, no one has had any doubt about who is the power in the land.

 

City of melancholy

The view from the Ottoman palace was magnificent. Beneath a luscious, pine-shaded garden an oil tanker plied its way towards the Black Sea. Small ferries dodged across the sea lanes. It was not, I hasten to add, Davutoglu’s private residence. It had just been borrowed, for the backdrop. But it reminded a Turkish friend of something she had heard once from the AKP, Erdogan’s ruling party: that they would not rest until they were living in the apartments with balconies and gardens overlooking the Bosphorus that had always been the preserve of the secular elite they wanted to replace.

Pamuk also writes about hüzün, the melancholy that afflicts the citizens of Istanbul. It comes, he says, from the city’s history and its decline, the foghorns on the Bosphorus, from tumbledown walls that have been ruins since the fall of the Byzantine empire, unemployed men in tea houses, covered women waiting for buses that never come, pelting rain and dark evenings: the city’s whole fabric and all the lives within it. “My starting point,” Pamuk wrote, “was the emotion that a child might feel while looking through a steamy window.”

Istanbul is suffering a mighty bout of something like hüzün at the moment. In Pamuk’s work the citizens of Istanbul take a perverse pride in hüzün. No one in Istanbul, or elsewhere in Turkey, can draw comfort from what is happening now. Erdogan’s opponents wonder what kind of future they can have in his Turkey. I think I sensed it, too, in the triumphalist crowds of Erdogan supporters that have been gathering day after day since the coup was defeated.

 

Down with the generals

Erdogan’s opponents are not downcast because the coup failed; a big reason why it did was that it had no public support. Turks know way too much about the authoritarian ways of military rule to want it back. The melancholy is because Erdogan is using the coup to entrench himself even more deeply in power. The purge looks too far-reaching, too organised and too big to have been a quick reaction to the attempt on his power. Instead it seems to be a plan that was waiting to be used.

Turkey is a deeply unhappy country. It is hard to imagine now, but when the Arab uprisings happened in 2011 it seemed to be a model for the Middle East. It had elections and an economy that worked and grew. When I asked Davutoglu around that time whether there would be a new Ottoman sphere of influence for the 21st century, he smiled modestly, denied any such ambition and went on to explain that the 2011 uprisings were the true succession to the Ottoman empire. A century of European, and then American, domination was ending. It had been a false start in Middle Eastern history. Now it was back on track. The people of the region were deciding their futures, and perhaps Turkey would have a role, almost like a big brother.

Turkey’s position – straddling east and west, facing Europe and Asia – is the key to its history and its future. It could be, should be, a rock of stability in a desperately un­stable part of the world. But it isn’t, and that is a problem for all of us.

 

Contagion of war

The coup did not come out of a clear sky. Turkey was in deep crisis before the attempt was made. Part of the problem has come from Erdogan’s divisive policies. He has led the AKP to successive election victories since it first won in 2002. But the policies of his governments have not been inclusive. As long as his supporters are happy, the president seems unconcerned about the resentment and opposition he is generating on the other side of politics.

Perhaps that was inevitable. His mission, as a political Islamist, was to change the country, to end the power of secular elites, including the army, which had been dominant since Mustafa Kemal Atatürk created modern Turkey after the collapse of the Ottoman empire. And there is also the influence of chaos and war in the Middle East. Turkey has borders with Iraq and Syria, and is deeply involved in their wars. The borders do not stop the contagion of violence. Hundreds of people have died in the past year in bomb attacks in Turkish cities, some carried out by the jihadists of so-called Islamic State, and some sent by Kurdish separatists working under the PKK.

It is a horrible mix. Erdogan might be able to deal with it better if he had used the attempted coup to try to unite Turkey. All the parliamentary parties condemned it. But instead, he has turned the power of the state against his opponents. More rough times lie ahead.

Jeremy Bowen is the BBC’s Middle East editor. He tweets @bowenbbc

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue