Andrew Grice: Ed Miliband finally gives his critics some meat to chew on

Inside Westminster

Ed Miliband can’t win. He is repeatedly criticised for having no policies and being in denial about the deficit in the public finances.

When the Labour leader announces some policies and spending cuts, as he did this week, his critics complain that it is not enough. They want to know how many billions of pounds his cap on welfare spending would save. They want blood and guts – now.

Mr Miliband is in the same boat as David Cameron in his struggle with the Eurosceptics: they and their media allies are never satisfied and always come back for more. As someone who has consistently demanded more policy “red meat” from Labour in this column, it would be churlish not to welcome this week’s important speeches by Mr Miliband and Ed Balls, the shadow Chancellor. We might just look back on it as the week when Labour finally got serious about tackling the deficit.

The speeches, designed to boost Labour’s credibility on the economy and welfare, were long overdue. They were the product of months of agonised debate about the content and timing. It might have looked to the critics that Labour had brought forward a mouse but to the participants it felt more like giving birth.

The end result was more significant than Labour has been given credit for. The party would no longer borrow to fund day-to-day spending on public services. It would live within the present Government’s budget ceiling for the 2015-16 financial year. Any extra spending would have to be funded by cuts elsewhere. It is not quite as tough as it sounds. To answer Labour warnings that the party would be no different to the Conservatives, a Labour Government would borrow more than them (perhaps £10bn) to “rebuild Britain”. One flagship Labour manifesto pledge is likely to be to build one million homes in five years.

The other significant event of the week is that Mr Miliband and Mr Balls, who have been working along parallel lines, finally converged. Mr Balls understandably wanted to attack George Osborne for cutting “too far, too fast” and stalling growth, which the shadow Chancellor predicted before anyone else in 2010. But there has been a tension between that and Mr Miliband’s desire to set out a long-term vision for a new model economy, about which Mr Balls is sceptical.

The Labour leader has been pressing for a change of gear from what the party would do if it were in power now to what it would actually do it if wins in 2015. Mr Balls has clung to his cherished five-point plan for the here and now, including a £12bn temporary cut in VAT. The shadow Chancellor’s instinct was to repeat the January 1997 trick of unveiling Labour’s tax and spending wares in a big pre-election bang. Mr Miliband argued that today’s circumstances are very different: the economy has not recovered; Labour has recently been in power and is blamed by many voters for the deficit; the party needs to overcome its “trust problem”, cynicism about all politicians and fatalism about cuts and must show it is fit to govern in an age of austerity.

Mr Miliband has now prevailed. But the measures announced this week are only a start. A saving of £100m from withdrawing the winter fuel allowance from better-off pensioners is a tiny drop in a giant bucket. The £2.3bn from not reversing the Coalition’s squeeze on child benefit is not a real cut since the Treasury has already pocketed the money.

The Labour leader cannot afford to disappear down a rabbit hole and pop up with a few more symbolic cuts at his party conference in September. Shadow Cabinet ministers should be allowed to announce savings in their own areas to show voters Labour really does “get it” on the deficit.

The party should also spell out sooner rather than later which Coalition cuts it would not reverse – such as the so-called “bedroom tax” and the 1 per cent cap on the annual rise in benefits. Otherwise it will be accused of hypocrisy, opposing cuts that it knows it could not afford to overturn.

Were this week’s speeches a tactical shift or a new strategy? The answer may come in Labour’s response to Mr Osborne’s spending review on 26 June. The Opposition should resist the temptation to attack the Chancellor’s failures while saying little about how it would balance the nation’s books. One Labour frontbencher said yesterday: “We have been in a self-made trap since 2010. This week we prised the door open and we are peering out. The question is whether we jump out of it.”

Labour ends the week in a stronger position than it was at the start of it. Mr Miliband and Mr Balls will doubtless be frustrated that their critics will never be satisfied. But they can take some comfort from the fact that Labour is now back in the only game in town – austerity. “People keep moving the goalposts for us,” one Labour aide said, “but at least that shows we are on the pitch.”

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