For his first intervention of the year, Ed Miliband has taken inspiration from the past. It was in a Sunday Telegraph article, the day after he was elected of Labour leader, that he first used the phrase “the squeezed middle” to describe those too rich to rely on state benefits but too poor to thrive in an era of falling living standards. In an article in today’s Daily Telegraph, he returns to this territory, warning of how “the British middle class is being squeezed by a cost-of-living crisis as never before”. Here are my five take-aways from the piece.
1. Miliband reaches beyond Labour’s core vote
By making such an explicit appeal to the middle class (and in a conservative newspaper), Miliband is seeking to reassure voters that he is not narrowly focused on Labour’s working class core vote. Recent policy announcements such as his pledge to abolish the bedroom tax, to restrict exploitative zero-hour contracts and to “strengthen” the minimum wage have appeared aimed at this group, which explains Miliband’s declaration that “The current cost-of-living crisis is not just about people on tax credits, zero-hours contracts and the minimum wage. It is about millions of middle-class families who never dreamt that life would be such a struggle.”
2. Labour’s “long-term” economic plan
David Cameron and George Osborne have recently taken to speaking of their “long-term” plan to mend the economy and Miliband wants voters to know that he has one too. He writes: “In recent months, Labour has been setting out how, as the next government, it would immediately tackle the cost-of-living crisis with measures ranging from a freeze on energy prices to a cut in business rates for small firms. But this is a task that would also require serious long-term changes being made to our economy, so Labour is producing specific proposals for how we would earn and grow our way to higher standards of living for everyone.”
Alive to the charge that Labour is too narrowly focused on short-measures, such as the energy price freeze, Miliband is seeking to demonstrate that he has a plan to deliver a permanent, rather than merely a temporary improvement in living standards.
3. The cost of living crisis began before the Tories
The most striking sentence in the piece is Miliband’s declaration that “Our programme is rooted in an understanding that this crisis began before the Tory-led government came to power.” This is a reference to how wages for 11 million low and middle income earners stagnated as early as 2003, long before the crash. It is also designed to assuage those voters who believe that Labour has not done enough to apologise for the mistakes and shortcomings of its time in office. While Miliband has not and will not apologise for “overspending” (since the record deficit was largely the result of the fall in tax revenues caused by the financial crisis, rather than excessive spending by Labour), he is showing that he recognises that Labour’s Britain was far from a land of milk and honey.
4. Don’t mention tax
As striking as what Miliband has to say, is what he doesn’t. The Tories have long argued that the best way to increase living standards is to cut taxes, but Miliband makes no reference to the subject. Labour has pledged to reintroduce the 10p tax rate, funded by a mansion tax on property values over £2m, but this would only benefit basic rate taxpayers, rather than those paying the 40p rate (a significant number of Telegraph readers).
While Labour is likely to target tax rises on higher earners, through policies such as the reintroduction of the 50p rate, a mansion tax, an increased bank levy and a bankers’ bonus tax, any refusal to rule out tax rises on “the middle class” (which, in the Telegraph’s view, includes anyone earning up to £100,000, rather than merely the average wage of £26,000) will prompt the Tories to dust down their 1992 “tax bombshell” posters. But it’s a guarantee Miliband is unlikely to be able to give, not least because, as he notes, Labour will have to devote much attention to “paying down the deficit”. The IFS has emphasised that £12bn of tax rises or welfare cuts will be needed merely to keep public service cuts at their current pace.
5. Higher benefits for those who “contribute” – but who’ll pay?
Miliband’s piece is heavy on rhetoric and light on policy, but he reveals that Rachel Reeves’s first speech as shadow work and pensions secretary on Monday will “show how we can ensure more people are in decent jobs while our social security system rewards work and contribution.” This is a reference to the Beveridgean contributory principle: that those who put more in, get more out. In an article last year, Reeves’s predecessor, Liam Byrne, pledged to to examine a higher rate of JobSeeker’s Allowance for those who have contributed more. He writes:
I think social security should offer more for those that chipped in most either caring or paying in National Insurance. Our most experienced workers and carers have earned an extra hand. We should make sure there something better for when they need it. That’s why we’re looking at just how we put the something for something bargain at the heart of social security reform, starting with a new deal for the over 50s.
This might sound attractive, but one concern among some in Labour is that, to to be affordable, higher benefits for some must mean lower benefits for others. As one Blue Labour figure told me, “our main welfare policy could actually prove more expensive”. Unless Miliband makes it clear who will pick up the bill, the Tories will be able to charge Labour with promising more of the unfunded spending that “got us into this mess”.
Now listen to George discussing Labour and the middle class on the NS podcast: