By now, Ed Miliband should be feeling upbeat about next week’s Labour party conference. No matter what happens in Liverpool, it can’t be more debasing than the spectacle the Liberal Democrats laid on in Birmingham. The Lib Dems’ decision to insult their coalition partners did nothing to enhance their standing. If the Tories are, as Vince Cable put it, the ideological descendants of those who sent children up chimneys, why did his party join these villains in government?
Against such juvenile behaviour, the Labour conference will, for the first time in years, look like a convention for grown-ups. All Ed Miliband needs to do is look as if he is leading a government-in-waiting. It is easy to dismiss Miliband. He has struggled to make an impression on the political stage or improve his party’s ratings in the polls. But if Britain tips into another recession — an increasingly likely possibility — the next election is his to lose.
It is easy to forget that Labour is already within striking distance. Miliband has 258 MPs: historically, it is odd for an opposition with so many seats to lose the next election. David Cameron has many skills, but winning elections is not his strong suit. This time last year, the Conservatives imagined that an economic recovery would win them a second term. Now, such talk has vanished. Unemployment is rising again, and the government is relying on artificially cheap debt. Should the cost of borrowing return to normal, as it has in Italy, calamity would ensue.
If the Tory-Lib Dem project is deemed to have failed, to whom can voters turn? Labour now has the monopoly on opposition votes, so has led opinion polls for nine solid months. Jim Murphy, perhaps the last surviving Blairite on the Labour front bench, says on page 14 that the poll lead could be larger. But his party is doing astonishingly well already, given its near total lack of decent ideas. This time last year, when Ed Miliband was being enstooled as Labour leader by the unions, it looked as if his party would have the luxury of ten years of opposition. Now, this looks far less certain.
So Miliband needs to look ready. This requires a credible economic policy, no easy task with Ed Balls in charge. The shadow chancellor’s claims that the cuts are to blame for the slowdown is hard to sustain, given that they have not started yet. Balls’s own ideology — his peculiar belief that more debt is the solution to almost every problem — has left him blinkered. The real villain is the resurgence of inflation, which the Bank of England seems unable to control or understand. This erodes business confidence and consumer spending, and it has powerful political effects: people see their purchasing power and savings decimated, and know they are getting poorer.
Miliband has the better analysis. His talk about the ‘squeezed middle’ gets far closer to the real problem: that British living standards are already suffering their most sustained downturn in 80 years. This has to do not with government spending, but with the politics of inflation: something the current generation of politicians seem to have forgotten all about. Inflation is a pernicious evil which hits the poorest hardest. It is likely to persist, as wages remain frozen and prices keep soaring. So far, government ministers have ignored the problem — because, since 1997, the problem has technically been outsourced to the Bank of England. This change in political mechanics does not make voters any less angry. Ed Miliband can, at the very least, say that he feels their pain.
He can also put forward an obvious solution: income tax cuts for the low-paid. If the government will not implement this fairly obvious measure, then Labour should propose it. It is being used as a stimulus tool abroad, and to great effect. Barack Obama has just proposed a $245 billion income tax cut to boost the American economy; Labour could propose something similar. Ed Balls is right to say that tax is too high, but wrong to complain about VAT. We don’t need more shopping, but more jobs. Cutting taxes on jobs will shorten British dole queues.
Miliband should trust his instincts, and mistrust those of Ed Balls. The ‘cuts’ narrative obsesses Westminster and tax-funded organisations like the BBC, but the cost of living is by far the greater problem. He should also talk directly about the implications of the eurozone break-up, something which the coalition cannot do because the two parties do not agree. Jim Murphy says that a break-up is inevitable. Such candour would put Labour back into the national debate. As Miliband knows, Labour could defeat the government over Europe by voting with the Tory rebels. Doing so is his best chance of forcing an early election.
Ed Miliband is not ready for this. His ponderous, directionless leadership has made almost no impact on British politics so far, and his opposition strategy appears to be standing and watching the government make mistakes. He does not deserve the opportunities which lie in front of him, and he may lack the resolve to take them. But if Britain is plunged into a fresh economic crisis, David Cameron will be lucky to survive it. It is tempting to ignore Ed Miliband, but he is terrifyingly close to power.
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