Ed Miliband has been warned by Labour MPs that he must start giving voters answers to crucial questions about the party’s stance on spending and borrowing.
The MPs, including some frontbenchers, are alarmed that the party’s poll lead over the Conservatives has narrowed in recent weeks. They believe this has been caused by the Labour leadership’s uncertainty in media interviews about its economic policy, and by Tory claims that it has become the “welfare party”.
Mr Miliband’s critics argue that he must do some hard thinking before Labour responds to Chancellor George Osborne’s Government-wide spending review on 26 June. “It is a big moment for us,” one Labour frontbencher admitted. “We won’t be able to avoid the ‘what would you do?’ question any longer.”
Some shadow Cabinet members want Labour to set out a clear deadline for eliminating the deficit, perhaps by 2017-18. They hope that would help regain economic credibility and create room to argue for a short-term rise in borrowing to secure the growth that Labour claims has been strangled by the Coalition’s cuts.
It might also enable Labour to answer the Tories’ most potent criticism: “the answer to a debt crisis is not more borrowing” – a version of Margaret Thatcher’s “household economics” which appears to ring true for many voters.
These shadow ministers believe Labour could get “permission” to spend a little more than the headline figures to be announced by the Chancellor, but only if the party spells out some symbolic cuts and “switch spends” from one area to another to reflect its different priorities.
However, Ed Balls, the shadow Chancellor, is in no hurry to declare his hand. He is arguing that, when nobody knows how the economy will be doing in two months, it would be foolish to set out spending plans for two years’ time, at the general election.
His target date for a major announcement is January 2015, repeating the timetable before Tony Blair’s landslide victory in 1997, when the party announced key tax and spending decisions four months before the election.
Mr Miliband always intended to send some more signals about what Labour would do in 2015 once today’s local elections were over. Mr Balls may be prepared to do that, without being pinned down to detailed figures on spending.
According to some Labour MPs, the absence of such an agreement between Mr Miliband and Mr Balls caused the “car crash interview” Mr Miliband gave to BBC Radio 4’s World at One programme on Tuesday, in which he refused 10 times to admit that the party would borrow more to fund its proposed temporary cut in VAT to kick-start the economy.
What the Tories gleefully dubbed a “Milishambles” was doubly damaging. It exposed Labour’s Achilles heel on borrowing and revived doubts about Mr Miliband’s leadership, which had been silenced by his stronger performance in recent months.
The Tories believe their two trump cards in 2015 will be voters’ reluctance to trust Labour on the economy and “the choice” between David Cameron and Mr Miliband as prime minister.
The following morning, the Labour leader was up early and admitted on ITV’s Daybreak programme that cutting VAT would require a short-term rise in borrowing – even if, as he argued, faster growth would cut borrowing in the medium term. Inevitably, his admission produced headlines about a U-turn in hostile newspapers.
Mr Miliband had been warned. Three weeks before the Radio 4 interview, Tony Blair warned in the New Statesman that Labour risked retreating to its “comfort zone” and becoming an anti-cuts protest party. “The guiding principle should be that we are the seekers after answers, not the repository for people’s anger,” the former prime minister wrote.
One Labour MP said: “Blair has already been proved right. We need some answers about what we would actually do in 2015. To the public, it looks like we oppose every cut. That builds into a picture that we would be spendthrift and not address the deficit.”
There was another warning that the award questions would keep coming a week later when The Independent revealed that Labour is preparing to spend more than the present Government’s ceiling, rather than stick within it as Mr Blair promised in 1997.
Labour MPs believe Mr Miliband wants to say more about what the party would do if it wins in 2015, rather than talk about what it would do if it were in office now. Ironically, it is unlikely that Labour would spend £12bn on a temporary VAT cut in 2015 – the policy which caused Mr Miliband so much grief this week. But it is part of a holding operation until Labour resolves its dilemma about when to start talking about its plans for government rather than opposition.
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