Stop going on about 'predistribution', Ed, and talk like everybody else

Inside Westminster: Labour tongues are wagging about Ed Miliband's latest big idea, but what does it all mean?

Gordon Brown once described his bright young Treasury aide Ed Miliband as "a cross between an academic and a preacher". Some Labour insiders are starting to worry that the label still applies today.

Labour tongues are wagging about Mr Miliband's new big idea – predistribution, coined by Jacob Hacker, a professor at Yale University in the US. What does it mean? Boosting the wages of those on low and middle incomes so they don't need to rely on state-funded top-ups. It's a shift away from Labour's traditional goal of "redistribution", symbolised by Mr Brown's expensive tax credits.

Mr Miliband sees predistribution as part of the answer to the crucial question facing Labour: how does a party made for good times and with a reputation for high public spending, pursue its fairness agenda when there is no money? On a philosophical level, predistribution makes sense. But it's never going to be an election-winning slogan. It wouldn't fit on a pledge card. Nor could it be explained in three sentences on the doorstep.

His internal critics claim it's another example of "Academic Ed", stuck in a comfort zone inhabited by policy wonks and think tanks. That's a bit unfair, as he never intended it to be a campaign slogan. "An economy that works for working people" is a phrase that he also uses, which is better but still pretty vacuous. When asked to explain what predistribution would mean in policy terms, Labour folk talk about improving skills and vocational education, but these are old ideas. More fresh is Mr Miliband's interest in the grass-roots campaign for a living wage, which – at £8.30 an hour in London, £7.20 an hour outside it – would be significantly higher than the £6.08-an-hour national minimum wage. However, his aides speak of encouraging companies to pay it rather than forcing them by law, which would smack of an Old Labour attempt to saddle business with the costs of the welfare state. Predistribution would not do much for those not in work, such as the unemployed, sick and retired. And helping those already in work to earn more would require a major expansion of affordable childcare, a problem to which the Coalition is finally waking up.

To complicate matters, Mr Miliband and Ed Balls, the shadow Chancellor, insist they are not abandoning redistribution and favour both predistribution and redistribution. This is, presumably, to avoid frightening Old Labour horses such as the trade unions. But it is a bad sign. Labour is not going to get a hearing for whatever becomes its big idea until it gains fiscal credibility. Although it has closed the opinion-poll gap with the Conservatives on economic competence, that might well reflect growing fears that George Osborne's plan is failing rather than any feeling that Labour can be trusted to run the show.

True, Mr Miliband and Mr Balls have told the unions a Labour government could not reverse all the Coalition's cuts and that public-sector pay restraint must continue. The unions have got the message and don't like it, which is why they gave Mr Balls such a lukewarm reception at the TUC conference this week. But I doubt the public have heard it.

"We are in danger of putting the cart before the horse," one Labour frontbencher says. "There's no point in talking up grand ideas like predistribution until we have re-established our credibility. We have got to lay the foundations first."

That will require some tough decisions, such as accepting that Labour would not exceed the Coalition's tight spending limits for the first two years after the 2015 election. Mr Brown did so in 1997, helping New Labour to pass the credibility test. A repeat now would still allow Labour to "switch spend" within the budget ceilings.

When I interviewed them recently, both Mr Miliband and Mr Balls insisted they would resist the temptation to sit back and watch the austerity medicine fail – as the shadow Chancellor, to his credit, always warned it would. Yet their actions sometimes give the impression of doing just that. Two years ago, when Mr Miliband became party leader, we were promised a wholesale policy review, the first fruits of which would emerge at this month's Labour conference. It has died a quiet death. Shadow cabinet members have been told to perform soft-mood music rather than unveil hard policies (or, more importantly, examples of where they would cut spending). Promised internal Labour reforms which could have diluted the unions' influence have also fizzled out. There is no sign of the new fiscal rules Mr Balls promised a year ago.

Why? "The economy is all too uncertain. We cannot announce our tax and spending plans for 2015 now," comes Labour's reply. A few symbolic policies will probably be unveiled at this month's conference, but I doubt we should hold our breath. Some Labour MPs fear the leadership will miss a trick, arguing that this is precisely the right moment to display the party's wares because floating voters who gave the Coalition the benefit of the doubt are starting to look for an alternative.

Despite that, Labour gives the impression that it would rather talk about the Liberal Democrats than about what it would do at a time of national economic crisis. Flirting in public with Vince Cable and getting under Nick Clegg's skin may be fun and warm Labour hearts, but I suspect it leaves the voters pretty cold. It is starting to look like a diversion from the real question: what would Labour actually do?

In the speech this month in which he talked about predistribution, Mr Miliband promised there could be no going back to the ways of the Blair-Brown era because the economic climate is so bleak. But there was precious little meat on the bones. The gossip among his audience at the Policy Network think-tank event was that the politician Mr Miliband made an academic speech while Larry Summers, the former US Treasury Secretary who is now an academic, gave a highly political one in which he demolished Mr Osborne's strategy.

Miliband allies insist that "it's good to think", so that when the time is right to announce policies, they will be firmly underpinned. He is aiming high, for a new economic order to replace a 30-year consensus that has failed. Fair enough. "Responsible capitalism", Mr Miliband's theme at last year's conference, was ridiculed at the time but has been vindicated by events. Yet the question arises again: where's the beef? This year, it won't be enough to say: "I told you so."

There is still time – just. Labour has made progress. It could have fallen apart after its 2010 defeat and after Mr Miliband's act of fratricide against his older brother. Neither happened. He may feel on course for power. But a long personal journey lies ahead. "We don't know much about him," voters tell Labour's focus groups.

His critics, on the right and left, claim Mr Miliband doesn't know what he wants to do, and is muddling through. I suspect they are wrong, that he is a man with a plan. It is time he started to share it with the rest of us.

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