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  1. Election 2024
30 March 2015

Why Miliband still won’t make the case for “good borrowing”

The Labour leader fears that being explicit would reinforce his party's profligate reputation. 

By George Eaton

When Lucy Powell, Labour’s election vice chair, said yesterday that the party would “use some investment borrowing for much-needed investment” the Conservatives pounced on this as an apparent revelation. In reality (as the Tories know), it has long been Labour’s position that it would borrow for this purpose, pledging only to eliminate the current deficit (therefore excluding capital spending). What distinguished Powell’s remarks was that she said the B-word: borrowing. 

Ed Miliband’s refusal to do so at Labour’s business manifesto launch today offered an insight into how deadly he believes this term is for the party. Asked, as Powell was, whether the party’s pledge to borrow for investment meant that a deficit of around £30bn would remain at the end of the next parliament he didn’t deny this was the case but also didn’t make the case for “good” borrowing. 

There was a period around 2013 when Labour toyed with doing so, with strategists arguing that voters are able to distinguish between borrowing to fund day-to-day spending and borrowing for investment, just as they distinguish between “borrowing to fund the weekly shop” and “borrowing for an asset like a house”. But the argument was never taken up with consistency by Miliband. In an ill-fated interview on The World At One he refused eight times to admit that Labour would borrow more than the Tories. 

After Miliband’s speech, a Labour aide pointed out to journalists that the Tories’ refusal to borrow for investment meant they had to explain which services they would cut in order to fund infrastructure. Would “little Peter’s Sure Start centre” be cut “to pay for Paul’s construction”? It’s a sensible and persuasive argument but that Miliband is unwilling to make it himself shows how politically hazardous he believes this subject is. Labour’s profligate reputation means that while it’s willing to borrow, it doesn’t want to talk about it. 

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