Inside Westminster: David Axelrod needs to find the Labour Party some new tunes

The cost-of-living campaign was a brilliant and, for Labour, very convenient diversion from the elephant in the party’s room

When his inner circle debates Labour’s strategy, Ed Miliband plays the role of a mock Conservative canvasser who knocks on someone’s door and says: “Hello. I’m from the Conservative Party and I’m here to tell you that the cost of living crisis is over.”

The Labour leader remains convinced that his campaign on living standards is as valid as ever, despite this week’s official figures showing that average wages are rising faster than inflation for the first time in six years.

Yesterday’s appointment of David Axelrod, a strategist who helped Barack Obama win two presidential elections, as a senior adviser on Labour’s general election campaign, is another sign that Mr Miliband will not be dislodged from his chosen turf.

Mr Axelrod, who detected the stardust in a young Mr Obama in Chicago and played a pivotal role in his remarkable journey to the White House, said yesterday that the President and Mr Miliband faced the same challenge – to ensure that prosperity was not “hoarded by a few, where people at the top are getting wealthier but people in the middle are getting squeezed”.

But campaign skills and techniques are not always transferable between countries. In the 2012 presidential campaign, Mr Axelrod’s main weapon was a $500m (£300m) advertising spend. Next year, Labour will have a shoestring budget, perhaps £10m for its entire campaign. Its message must go through the media prism, including mostly hostile newspapers.

Although signing up his company, AKPD Message and Media, is a coup for Labour, it remains to be seen how much time Mr Axelrod will spend in the UK or devote to the party’s election effort. It seems he will be less “hands on” than Lynton Crosby, the tough Australian who will oversee the Conservatives’ campaign, and Ryan Coetzee, the equally hard-nosed South African who is Nick Clegg’s director of strategy. (Like business, political campaigning has clearly gone global). Mr Axelrod, known as “Axe”, can play hardball too, which is just as well. Within hours of his appointment, Mr Axelrod got a taste of the dirty war to come, as Tory sympathisers leaked claims that his firm was paid a fortune to lobby for an increase in electricity prices, which jars a little with Mr Miliband’s proposed price freeze.

Mr Miliband’s cost-of-living campaign was a brilliant and, for Labour, very convenient diversion from the elephant in the party’s room – its lack of economic credibility. But with the power of this message diluted –if not eradicated – by an improving economy, the competence question will return to centre stage.

The scale of the challenge Mr Axelrod is taking on is enormous. I have covered seven general elections since I started working at Westminster in 1982. In none of them has a party lost after being ahead on both economic competence and having the best prime minister. The Conservatives and David Cameron are ahead on both measures, meaning Labour’s six-point lead in the voting intentions polls could easily melt away when people make up their minds at next year’s general election.

The challenge is wider than the economy and presenting Mr Miliband as a prime minister-in-waiting. There is enormous tension behind the scenes over Labour’s next moves on a whole range of issues as its wholesale policy review comes to a close in July. Voters have little idea what Labour would do on education, health and crime, and it is time to fill in the blanks.

Team Miliband promises us that the party’s election platform will be both “radical and credible”, insisting that you can’t have one without the other. This is a bit of sticking plaster designed to cover up the fault lines between those who want Labour to have something genuinely bold and new to say, led by Jon Cruddas, who heads the policy review, and others advocating a more cautious approach.

A second divide is between the fiscal realists who put a high premium on economic credibility, including Ed Balls, and Miliband soulmates who want a more daring approach. The only person who can resolve these dilemmas is Mr Miliband.

Mr Axelrod will also have to navigate dangerous cross-currents. At present there is stasis; frustrated Shadow Cabinet members risk having their knees as well as their policy aspirations capped if they dare to depart from the “cost of living” script.

Elections are about the future, not an inquest into the past. Labour needs to stop complaining that Mr Osborne’s much-vaunted “economic plan” has “failed”, as Mr Balls did yet again this week. It is a message the public will not buy because things can only get better. Labour needs to make its own forward-looking offer on growth and the jobs of the future, and gain credibility by spelling out how it would cut spending.

Of course, the cost of living and the need for a “fair recovery” can still be one weapon in Labour’s armoury. But it cannot be the only one. Mr Axelrod needs to find Mr Miliband some new tunes.

The former journalist likes to weave a “story” about the leader rather than his policies. But the $64,000 question is: does Mr Miliband have the Obama stardust? Mr Axelrod is about to find out. He will know that rule one of communications is that any campaign is only as good as the product.

Who'll give up their seat for Boris?

As a political editor, I think it would be totally unethical of me to bet on politics. However, I did advise my son to back Ed Miliband at the start of the Labour leadership race (at 7-1). I also told him, a couple of years ago, that Boris Johnson was a good bet at 6-1 as next Conservative leader. Today he is at 9-2.

The Mayor of London continues to attract much more media coverage about his future intentions than his day job. He is winning growing plaudits from Eurosceptic Tory MPs, who have clocked his tougher language about the EU.

Boris insists he will complete his four-year term as Mayor, which runs until 2016. But he never quite rules out returning to the Commons at next year’s general election, allowing him to run if it were followed by a Tory leadership race.

But that means finding a seat. I have always believed he would land one shortly before the election when a long-serving Tory MP decides to stand down at the last minute. My money – not literally – is on Sir Paul Beresford, 68, the former leader of Wandsworth Council, making way for Boris in Mole Valley, Surrey. His majority of 15,653 would do nicely