How can Ed Miliband pursue his agenda without spending billions?

The Labour leader believes he can be both radical and credible by offering solutions without throwing money at problems

About 120 Conservative MPs were in high spirits at a party in the Downing Street garden on Wednesday. It was David Cameron’s reward for the “goodies” who made the required three visits to Newark during the by-election campaign. As they shared their doorstep experiences in Newark, a military band on Horse Guards Parade provided unplanned entertainment.

Momentum is a precious commodity in politics and the Tories’ by-election win has given their MPs real hope of retaining power at next year’s general election. Although they know they must woo back voters who defected to Ukip, the Tories’ poor third in last month’s Euro elections is largely forgotten.

Paradoxically, when the opinion polls still point to a Labour majority, Tory MPs dare to think they can win, while Labour MPs fear they will lose. “There is a crisis of confidence,” one senior Labour backbencher confided.

Ed Miliband has had his crises before. He normally bounces back and will try to do so again in an important speech next Thursday. He will begin the next phase of unveiling Labour’s plans for government, to be followed soon by the long-awaited fruits of its wholesale policy review.

The Labour leader will be speaking at the launch of “Condition of Britain”, a year-long project by the IPPR think tank. Its report, with 30 fully funded policy proposals, was drawn up after interviews with 400 people around the country. It addresses the $64,000 question for all centre-left parties: how to “build a good society in an era of austerity” when spending billions of public money is no longer an option.

The landmark report is being compared in Labour circles with the 1994 Commission on Social Justice (secretary – David Miliband), which heavily influenced the Blair government’s strategy.

The IPPR blueprint is timely as the other Miliband prepares for the first post-crash election. Its three pillars will be: spreading power and responsibility (downwards to local communities); encouraging and rewarding “contribution” to society (for example, in the benefits system) and strengthening services and institutions rather than handing out benefits and the tax credits which ballooned under New Labour.

The report will shape Mr Miliband’s agenda but he will not accept all the IPPR proposals. For example, he will reject a plan to fund universal childcare by freezing child benefit. However, an IPPR plan to switch spending on housing benefit to housebuilding is likely to find favour.

Mr Miliband will argue that the answer to the $64,000 question is “big reform, not big spending”, and radical change rather than “make-do-and-mend spending solutions”.

I suspect Mr Miliband is trying to kill two birds with one stone. He knows Labour must offer a positive “big-picture” vision that enthuses the public, not just a list of pledges like his energy price freeze or cap on rents. They are popular enough but do not add up to a coherent whole. That is why David Axelrod, the Obama adviser hired by Labour, told him voters must “see the forest, not the trees”. Far from having no policies, as the Tories sometimes claim, Labour arguably has too many that do not knit together.

The other “bird” is Labour’s lack of economic credibility. While voters might like the idea of a price freeze, they are sceptical that Labour would deliver it. “The more we promise people what they want, the more implausible it becomes,” groaned one Labour frontbencher.

Mr Miliband insists he does not need to choose between being radical and credible. He believes he can be both by offering solutions without throwing money at problems. Of course, that requires state intervention and regulation, which the business world does not like and allows the Conservatives to portray Labour as dangerously left-wing.

Sometimes Labour is its own worst enemy and its headline-grabbing language fuels the Tories’ campaign. Capping rents sounds like a throwback to the Seventies but Labour’s policy could be portrayed as a market-based solution since landlords would be able to raise rents in line with the average increase.

The spotlight falls on Labour’s 20-month energy price freeze rather than the reforms the party would bring in during that period to bring more competition to the energy market. Its shake-up of the banks would inject more competition.

They are designed to help small business but are seen as anti-business. The other cloud on Mr Miliband’s horizon is Ukip’s strong working-class support at last month’s elections. Labour minds are finally turning to this very real threat.

But Mr Miliband sees no reason to change the course he set when he became party leader. The election results are another symptom, he believes, of problems in our economy, society and politics that leave many people disillusioned and despairing. As he will make clear this week, this makes him even more determined to tackle the root causes. He now has less than 11 months to persuade people to join his crusade.

Politicians need to be less on the ball

Beware politicians who talk about football during the World Cup. I suspect they are more likely to have read a “zeitgeist brief” prepared by their advisers rather than to be a real fan.

A current government minister once asked my opinion of “Darren Atherton”. He had merged Darren Anderton, who played footy for my team (Spurs) with Mike Atherton, the England cricket captain.

Real footy fans can smell a fake and posing by politicians can be counterproductive. Why shouldn’t David Cameron admit he prefers tennis to Aston Villa and Ed Miliband that he cares more about the results of the Boston Red Sox baseball team than Leeds United?

Nick Clegg is more honest: he follows his sons’ latest team and has now settled on Arsenal.  In my experience, the politician with the most encyclopaedic knowledge of football is Gordon Brown, a true fan. Once we were talking about Bill Brown, the Spurs goalie when we won the double recently (1960-61). I said the Scot emigrated to Australia. “No. Canada,” growled the then Prime Minister. I checked; he was right.

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