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Nick Faith: Miliband faces a similar dilemma to that faced by Osborne in 2009

Faith nickNick Faith is Director of Communications at Policy Exchange. Follow Nick on Twitter.

“Now let’s see if I’ve just cost us the election.”  This line delivered by George Osborne to his advisers after his party conference speech in 2009 helps explain the Chancellor’s long term political calculations. In the midst of the financial crisis and a deteriorating economy, Osborne had just committed the Conservative Party to public spending cuts eight months before a general election. Voters now knew what they stood to lose from a Tory government.

Osborne knew that Gordon Brown and the Labour party would use his speech to paint Cameron’s modernisers as the same old ‘nasty’ party, ideologically committed to reducing the size of the state and attacking public sector workers. That’s exactly what Brown did in the months leading up to the election. The Conservative’s embrace of austerity probably cost the party at least twenty seats.

However risky Osborne’s speech was – and the Shadow Chancellor was well aware of its political implications – it did make it a lot easier for the Coalition to proceed with its deficit reduction programme. Unlike the Liberal Democrats’ broken pledge to oppose hikes in tuition fees, which has severely dented the standing of the party on the national stage and clobbered Clegg’s own personal ratings, the Conservatives had a clear mandate to proceed with reforming Britain’s hospitals, schools and other vital public services to drive up the quality in a more cost effective way.

Interestingly, history is repeating itself. Ed Miliband faces a similar dilemma to the one that Osborne faced in 2009. His party is currently riding high in the polls but at the same time he knows perfectly well that the public still do not trust Labour to handle the public finances. Polling from this year shows Balls and Miliband have a mountain to climb to overtake Cameron and Osborne on economic competence.

This leads us to a crucial question that political commentators on the Left as well as the Right are starting to already ask: in an era when it’s impossible to raise public expenditure what does Labour stand for?

Does Miliband acknowledge the electoral consequences of siding with the government and agreeing for the need to reduce public spending?  One option could be for Labour to set out how its spending priorities would differ from the Tories’ within a tight overall spending constraint – but that means proposing which areas of expenditure should be cut back.

Take schools. In 40 per cent of schools teaching is no better than satisfactory, and 6,000 schools provide only a satisfactory level of education. How can you drive up standards in state schools with no money? The coalition is proposing radical changes in the shape of Free Schools and Academy chains. What’s Labour’s position?

What about healthcare? The mass of evidence is that ordinary people want much more openness, choice and control in the NHS. They want to see information about the safety and results hospitals and GPs deliver for patients taken out of bureaucratic obscurity and handed to patients. Jeremy Hunt is driving forward a specific agenda focused on transparency, accountability and competition. What’s Labour’s position?

We saw what happened when Ed Balls announced his support for the government’s freeze in top public-sector salaries. It triggered a near-nuclear response from several of the big unions, including a threat by the GMB to disaffiliate from the Labour Party. Within days, Balls was back to stressing that the cuts were “too far and too fast”.

The Labour leader has done a tremendous job in keeping the various factions of his party together. I don’t blame him from shying away from making bold policy announcements even two and a half years away from the election. Party discipline comes first, policy can wait until we get closer to polling day. However, time is ticking away as it was for Osborne in 2009.

Labour’s policy rethink so far consists of some interesting ideas, a lot of soaring rhetoric, but very little detail yet. If Ed is going to capitalise on his poll ratings and really position Labour as the party for change he needs to explain what Labour is for when there isn’t going to be lots of money to spend on public services. That might mean a drop in his poll ratings and a loss of some marginal seats. However, in the long term it could give Labour the credibility to govern in a time of austerity.


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