The next election is going to be the “living standards” election. This week’s forecasts from the Office for Budget Responsibility show that the Tory election strategy will be to offer the public the chance to have back £6bn of its money in tax cuts. The figure echoes the £6bn in efficiency savings that the Tories made the centrepiece of their last election campaign, allowing them to pledge an end to “Labour’s jobs tax”. In the end, they cancelled the National Insurance rise for employers only, not employees, but they look likely to offer tax cuts at the next election, too.
Labour has to avoid fighting the last election again. In a speech to Demos this week, the party’s last election co-ordinator expressed regret that the run-up to Labour’s campaign was wasted on refusing to acknowledge the need for cuts and on using the “Mr 10 Per Cent” dividing line that worked in 2001 and 2005, but lacked credibility by the last election.
Douglas Alexander warned of a “jobless recovery” but was careful not to be seen to wish for one. The mistake the Tories made at the start of Labour’s first term was to predict “a downturn made in Downing Street” that never came. So it is vital that Labour avoids rubbing its hands at every bit of bad news and being seen to be willing a double-dip recession.
In the past week, the right has sought to attack Ed Miliband’s focus on “the squeezed middle” by attacking the definition of “middle”. Labour needs to ignore this and focus on policies to address the “squeeze”. There are many definitions of “the middle”, from John Healey’s essay for Demos back in the summer to Liam Byrne’s article in the latest issue of Progress magazine. It really doesn’t matter if voters are earning up to £50,000 and it really doesn’t matter if voters earning up to £30,000 are suffering a “triple crunch” or a double whammy. It’s the squeeze that matters, not the middle.
Across the country, there is a “squeezed generation”: those people paying for the social care of their elderly relatives while also trying to help their children through university or on to the property ladder. This generation is represented at the “bottom”, at the “top” and in the “middle”.
Young families will be squeezed by cuts to childcare tax credits. Commuters will be squeezed by rising rail fares. And if there is a jobless recovery or if living standards for Britain’s middle continue to stall, the squeezes will be cross-cutting and socially pervasive. Across the board, there is going to be a squeeze.
If the Tories go into the next election offering tax cuts, Labour should seriously consider matching at least some of these. For now, Labour needs to keep focused on framing the next election as “the living standards election”, because it will connect with the contemporary reality that voters are going to live through. They must hope for a recovery that raises living standards and returns the country to full employment.
Only when it fails to happen should they blame the government. The squeeze is coming and every voter will experience it in a different way. What matters is whether Labour can convince voters that it understands their squeeze and has solutions to help them feel better under Labour.
Richard Darlington is head of the Open Left project at Demos.