Today’s the day Ed Miliband answers his Blairite critics

Inside Westminster

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Indy Politics

A month ago, George Osborne set what looked like a clever trap for Labour by announcing a Bill to cap rises in most state benefits at 1 per cent for the next three years. This week, Ed Miliband marched his troops into the trap by opposing the measure in the Commons. But the mood was very different to the one the Chancellor had imagined.

Some Labour MPs initially thought Mr Miliband had taken leave of his senses by putting the party on the wrong side of the crude but effective “strivers versus scroungers” argument framed by Mr Osborne. Now they praise their leader’s bravery in swimming against the tide of public opinion on welfare.

Labour managed to halt it by pointing out that two thirds of those affected by the cap are in work and on tax credits, and by announcing a “tough but fair” policy – that people out of work for two years would lose benefits if they refused a guaranteed government job offer.

It seems that public opinion is a more nuanced than the Chancellor bargained for. Significantly, some Conservative MPs and ministers urged their leaders to stop implying that all benefit claimants are “scroungers”. Even Iain Duncan Smith, the Work and Pensions Secretary who is implementing the Bill, has urged his Tory Cabinet colleagues to mind their language.

In an important speech today, Mr Miliband will go further, arguing that David Cameron’s “attempt to divide the country between scroungers and strivers” and play “divide and rule politics” proves he has abandoned the compassionate Conservatism which was once his trademark.

The Labour leader will use his speech to the Fabian Society to flesh out the “One Nation” traditional Conservative theme he stole last September. There has been little definition since, apart from hundreds of Labour press releases littered with the “One Nation” phrase, which say nothing about what the party would actually do. “It’s retro policy making,” one Labour frontbencher told me. “Think of a theme first, and then fit the policies to it. We should have had some ready to roll out immediately.”

Labour remains risk-averse on policy, anxious not to tie its hands yet. But the clever announcement on the long-term jobless by Ed Balls and Liam Byrne, the shadow Work and Pensions Secretary, showed that declaring its hand can work. Other shadow Cabinet members looked on jealously: Mr Balls, the shadow Chancellor, has banned them from making policy commitments – even when they would save money. “It’s one rule for him, and another for the rest of us,” snarled one.

The Opposition needs to say more about welfare, on which it is too defensive. It’s not enough to say that the answer is to get more people back into work, that the problem is not the unemployed but unemployment. Labour is in danger of being the last main party to defend winter fuel payments, free bus passes and television licences for wealthy pensioners.

It thought that Mr Cameron’s pledge to maintain them gave it cover, but Nick Clegg and several Tory ministers are now in favour of these benefits being means-tested after 2015 – what Mr Clegg rightly bills “the first full-blown scarcity election”.

It might feel like good politics to Labour to pitch for the pensioners’ vote, especially as they do vote in large numbers. But Mr Miliband would look unrealistic to millions of other voters if he defends the indefensible pensioner perks for all. “If we win the election, we’d be in the same boat as Cameron now and we’d have to keep them,” said one Labour frontbencher.

Mr Miliband’s problem is that, so far, One Nation Labour has embraced universal benefits. Yet the world has moved on: this week, child benefit is no longer universal, since families with one earner on £60,000 a year lost it. So Labour needs a rethink. As David Miliband told the Commons in a powerful speech opposing the benefits cap on Tuesday: “Expanding childcare versus higher child benefit; housing benefit versus housebuilding and long-term care versus reliefs and benefits for old age. In each case, we need to choose.”

In today’s speech, Ed Miliband will seek to answer Blairites who complained that, when he pronounced New Labour dead, he had nothing to put in its place.

He will argue that New Labour was right to break with Old Labour and made millions of lives better, but was “too timid in enforcing rights and responsibilities, especially at the top, and was too sanguine about the consequences of rampant free markets.”

So Labour needs to move on from New Labour, as well as the Coalition’s “trickle-down, divisive ideology which cuts taxes for the richest and benefits for the poorest,” Mr Miliband will say. “The answer is not simply to carry on where we left off in government,” he will admit.

A Labour government in 2015 would not be able to spend “the proceeds of growth” like the Blair and Brown administrations. One Nation Labour means reshaping the economy to give everybody the opportunity to play their part; reforming society so all, especially powerful vested interests and the rich, accept their responsibility to play their part, and changing politics so people feel they have power and control over their lives.

The well-argued speech will lift some of the fog surrounding One Nation Labour. It provides a solid platform for Mr Miliband. Now he needs to build some policies on top of it.