After Ed Miliband delivered his speech at this year’s Labour party conference, pledging to freeze energy prices if elected, many predicted that the promise would unravel within days. Yet two months later, he retains the political advantage. Growth has returned, with the economy expanding at its fastest rate for six years, but Mr Miliband’s success in shifting the debate towards living standards, which have continued their decline, means the Conservatives have not benefited. The Tories remain torn between seeking to match his offer and desperately seeking to refocus attention on their preferred terrain of the deficit.
The Labour leader’s success was no accident. As Rafael Behr writes in his essay on “Milibandism” on page 32, his policies are underpinned by “a consistent analysis of what is wrong with Britain”. It was on the day after his election as Labour leader that Mr Miliband first used the phrase “the squeezed middle” and was widely mocked. It has proved to be of enduring relevance as the disconnect between the national income and voters’ incomes has become clearer. After stagnating in the years before the crash, real wages have fallen for 40 of the 41 months since the coalition government took office (the exception being April 2013, when high earners collected their deferred bonuses in order to benefit from the reduction in the top rate of income tax). The Labour leader was similarly derided for his interest in concepts such as “responsible capitalism” and “predistribution” but commentators have been forced to acknowledge their significance as they have been translated into the crunchy detail of policy.
With Labour’s poll lead and his personal ratings improving, Mr Miliband can speak with justified confidence of forming the next government. However, if his positioning has created opportunities for Labour, it has also created dangers. Mr Miliband has come under internal pressure to “shrink the offer” and put forward a modest manifesto that limits the room for attack by political opponents. A conflict has opened up inside the leadership between those who believe that the crisis of 2008 demonstrated the need for fundamental reform of the economy and state and those who believe there is little that cannot be resolved through the resumption of growth and the harnessing of its proceeds for public services. It is a battle of ideas between hard and soft reformers. And the choice facing the party is between the transformative politics of Blue Labour and the transactional politics of its Brownite antithesis.
Mr Miliband must side unambiguously with the former. The New Labour years demonstrated the limits of both an unbalanced economy over-reliant on the City and a bureaucratic state indifferent to public-service users. Because of the large fiscal deficit that a Labour government would inherit, reform of both is not just desirable but essential. As Jon Cruddas, the party’s policy review co-ordinator, noted in his speech on “one nation statecraft” in June, “Labour will inherit a state that in many areas has reached the limit of its capacity to cut without transformational change to the system.”
This means devolving power downwards from Whitehall and reorienting services such as the NHS around prevention rather than just cure. Andy Burnham’s proposal to integrate physical, mental and social care into a single budget and single service is perhaps the best example of the kind of reform required. By allowing more patients to be treated outside wards and freeing up to 40 per cent of beds, an integrated service could save the NHS around £3.4bn a year. But as a result of the structural reform required and the upfront costs involved, those in favour of a minimalist manifesto have sought to sideline the idea.
Here, as elsewhere, it is time for Mr Miliband to honour the bold rhetoric that won him the leadership in 2010 and this publication’s support. The Labour leader does not aspire merely to be an efficient manager of capitalism but a reformer in the mould of Attlee and Thatcher. He should resist those urging him to take the incrementalist path.