Change On The Scale

Seumas Milne writes:

If you’re in a fix, create a diversion. That will be the watchword of David Cameron’s Tories next week. George Osborne may have presided over the weakest recovery on record.

He may have spectacularly missed his fiscal targets. The deficit may be growing again. Real wages may have fallen for the longest period since the 1870s.

But Ed Miliband will certainly be the man in the frame at their Birmingham jamboree.

The Labour leader even forgot to mention the deficit in his conference speech, the Conservatives will hoot – tax cuts at the ready – so Labour can’t be trusted with the nation’s finances.

And fresh from bringing Britain to the brink of breakup, Cameron will play the English nationalist card as his winning ace. Miliband isn’t quite one of us, the dog whistle will have it.

The media has been playing warm-up act all week. Labour has “lurched to the left”, the Tory press complained, yet again. Miliband is pursuing a “core vote” strategy. He must return to the “centre ground”. 

The Telegraph even reckoned that £2m houses – which Miliband plans to tax to pay for more doctors, nurses and home care workers – can be “relatively modest”.

In the real-world Labour conference, Labour’s leader lurched nowhere. He was a picture of studied caution. 

Sure, there were plenty of commitments welcome to most people across Britain, from a boost to the minimum wage and restoring the 50% top tax rate to scrapping the bedroom tax and clamping down on zero-hours contracts.

And Miliband’s attack on the grip of the “privileged few” would certainly never have been uttered by Tony Blair in his New Labour pomp.

But there was little evidence of the determination to break with the past seen in his earlier Labour conferences, when Miliband denounced predatory capitalism and promised an energy price freeze and compulsory purchase of unused developers’ land banks.

Instead, Ed Balls’s pledges of undying austerity and 1990s-style New Labour policy fixes set the tone. Eight months before the general election, the “shrink the offer” merchants are back in the ascendant.

The timing of that shift, though, could hardly be more jarring.

Last week nearly half the Scottish people voted for independence in an insurgent campaign fuelled by rejection of austerity, privatisation, illegal wars and the grip of the Westminster elites.

Working class and Labour voters went for yes in droves. Those same sentiments are of course present among traditional Labour voters across Britain. The question is: who will represent them?

In England, unless championed by Labour, they can just as easily be harnessed by Ukip – or used to justify a Tory constitutional sleight of hand that could derail a Labour government and leave Liverpool and Newcastle at the mercy of a Farageist southern suburbia.

If any New Labour nostalgic still had the idea that its core vote had nowhere else to go, Scotland has surely demolished it for good.

The platform Miliband set out in Manchester this week could only be regarded as a core vote strategy from a particularly sheltered metropolitan vantage point that refuses to face up to how most of the population actually live and think.

How is taxing hedge funds, mansions and tobacco giants to protect the NHS, used by the vast majority, a core vote policy exactly?

Or reducing taxes on small businesses and strengthening the rights of the self-employed?

But after losing 4 million working-class votes between 1997 and 2010, it would be a suicidal Labour leadership that didn’t learn the lessons.

Without its core vote, at the heart of an alliance of working-class and middle-class voters, Labour can’t win.

But the lesson drawn by Douglas Alexander, Labour’s election strategist, from the political establishment’s near-death experience north of the border is not so much to woo working-class voters but to appease the kind of corporate giants that frightened Scots into the no camp with threats of closures and job losses.

Along with Ed Balls and Chuka Umunna, Alexander has formed a kind of corporate praetorian guard around Miliband to pacify the City and CBI and rein in the Labour leader’s instincts for building a new economic model in a post-crash world.

The shadow chancellor, who can’t be doing with new models, went a stage further this week.

Not only did he promise five more years of austerity, he pledged to cut child benefit in real terms for another year and dropped any commitment to extra capital investment.

Activists reported that the child benefit announcement, designed to demonstrate fiscal rectitude, went down especially badly on the doorstep in the Heywood and Middleton byelection campaign – where Ukip is looking like a potentially serious challenger to Labour next month.

Labour has still left itself room for more spending and borrowing than Osborne has lined up.

But not only do Balls’s austerity gestures fail to appease Labour’s opponents while alienating its natural supporters still further.

They also ignore the disastrous record of austerity in Britain and across Europe, even on its own terms.

Osborne’s four-year squeeze delivered three years of recession and stagnation, a forecast deficit of £75bn instead of a balanced budget and the longest fall in living standards since the 19th century.

Unsustainable growth has only been achieved by pumping up housing credit, while stagnating private investment and austerity have generated a productivity crisis and an epidemic of low-paid, insecure jobs.

Only the public sector can now fill that gap, taxing the corporate cash mountain and using publicly owned banks to deliver the investment the private sector won’t make.

But that would mean Miliband taking his still fragile plans for new forms of intervention and public banking further, instead of reverting to business as usual.

Without radical economic reform, as François Hollande’s French socialist government has shown, austerity can only pave the way to political failure.

For all the chorus of sceptics and Miliband’s dire personal polling, Labour could clearly still be propelled into government next year on the back of falling living standards and revulsion at Cameron’s Tories.

Which only makes it more urgent that the Labour leader brings his corporate guard to heel – and offers his party’s lost supporters change on the scale they desperately need.