Miliband’s shrewd political gamble

Labour leader Ed Miliband has steered the conversation away from austerity towards the cost of living. Emily Hohler reports.

Finding its economic strategy discredited by events, the Labour party has done the "only politically sensible thing", says the Financial Times. "It has changed the conversation."

Instead of trying to pin the blame for Britain's economic weakness on austerity, Labour leader Ed Miliband has started talking about the nation's cost of living crisis'. His message is simple: people are struggling and the government should help.

He has a point in 2011-2012 median real incomes were 5% below 2008-2009 levels, largely because of inflation and tax increases. And the pitch is politically "shrewd".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Yet, his suggested initiatives, which include an energy-price freeze and the confiscation of undeveloped land, are not the answer.

The problem for the Tories is that many people are keen on an energy-price freeze and the living wage, says Tim Montgomerie in The Times. Chancellor George Osborne's deficit-cutting strategy may be working, but people aren't seeing "enough of a connection between the national economic picture and their own circumstances". The Tories have to respond.

They should consider long-term changes to house-building policy, end green subsidies and consider a higher minimum wage. Income tax cuts are a priority for voters too. Osborne must "hurry up" and find a way to deliver them.

If ministers can find money for HS2, a higher aid budget and NHS payouts, they can find tax cuts for the lowest-paid and the small firms, which will spur recovery. Only then can they convince the low paid that they really get it'.

There are signs Prime Minister David Cameron does, says David Blackburn on his Spectator blog. At the Lord Mayor's Banquet this week, he attacked Labour's cost of living arguments, saying that raising state spending was not the answer this spending "comes out of the pockets of the same taxpayers whose living standards we want to see improve".

The corollary of this statement is that the solution is "smaller government and tax cuts", although Cameron knows that his government will struggle to deliver the latter before the election.

He went on to say: "The single biggest threat to the cost of living... is if our budget deficit and debts get out of control again. If interest rates and mortgage rates start to soar, the increase in cost of living will far outweigh the impact of any increase in government spending or indeed reduction in taxation."

The Tories' real electoral weapon is Help to Buy, says Janan Ganesh in the FT. The scheme "has few friends among economists" and many Tories deplore state involvement in the mortgage business. But they also realise there is a "glittering electoral prize" for any party that can connect with young and middle-aged voters priced out of the housing market.

Building more houses is the sustainable solution, but the party needs faster results. Help to Buy is already delivering them.

Emily Hohler

Emily has extensive experience in the world of journalism. She has worked on MoneyWeek for more than 20 years as a former assistant editor and writer. Emily has previously worked on titles including The Times as a Deputy Features Editor, Commissioning Editor at The Independent Sunday Review, The Daily Telegraph, and she spent three years at women's lifestyle magazine Marie Claire as a features writer for three years, early on in her career. 


On MoneyWeek, Emily’s coverage includes Brexit and global markets such as Russia and China. Aside from her writing, Emily is a Nutritional Therapist and she runs her own business called Root Branch Nutrition in Oxfordshire, where she offers consultations and workshops on nutrition and health.