Leading Labour thinker flags up 'tax and spend trap' with calls for greater Labour focus on a vision for sustainable growth
Ed Miliband will lose the next election if Labour falls into a trap set by the Conservatives and allows itself to be defined solely as the defender of public spending, one of the party's leading frontbench intellectuals has warned.
In a stark reminder of the challenge facing the Labour leader, who trails David Cameron on economic competence, Miliband is told he will face the same fate as Michael Foot and Neil Kinnock unless he avoids the "tax and spend" trap.
Gregg McClymont, the shadow pensions minister who is a former Oxford history don, writes in a new pamphlet that Labour will avoid the Tory trap only if it resists the temptation to appeal to its core supporters in the public services.
In a pamphlet for the Policy Network thinktank, established by Lord Mandelson, McClymont writes: "Labour can sidestep the electoral trap being sprung by the Conservatives by refusing to be driven back to its core support. A patriotic appeal to the nation to improve growth and living standards, not a simple defence of the public sector and public spending, is crucial to foiling Conservative attempts to render Labour the party of a sectional minority."
The warning by McClymont, whose pamphlet is jointly written with fellow Oxford historian Ben Jackson, comes days after a Guardian/ICM poll found that Labour is struggling on the economy. It found that 44% of respondents rated Cameron and George Osborne as better placed to "manage the economy properly". This compared with 23% for Miliband and Ed Balls, a 21-point advantage for the Tories, almost twice the 11-point advantage Cameron and Osborne enjoyed in October.
The poll findings highlight the central argument in the McClymont/Jackson pamphlet: that the Tories can prosper even when they preside over a severe economic downturn.
Stanley Baldwin, prime minister three times in the 1920s and 1930s, and Margaret Thatcher, the party's two most electorally successful leaders, won record electoral victories despite imposing deep spending cuts and presiding over sluggish economic growth.
In a New Year message released today, Miliband accuses the coalition of harking back to the Baldwin era with a "counsel of despair" that there is no alternative to rising unemployment. "When politicians shrug their shoulders in the face of other people's despair, they are not just abdicating responsibility, they are making clear choices. That is as true now as it was in the Great Depression during the 1930s."
Miliband suggests he is heeding one of the central messages of the pamphlet when he outlines a broad appeal that will focus on building a new economy. "We need a more responsible capitalism, a new approach to our economy and our society," he writes.
In the pamphlet, Cameron's Trap, Lessons for Labour from the 1930s and 1980s, McClymont and Jackson write that the Tories will fight hard to reprise the electoral successes of Thatcher and Baldwin. In spite of persistent high unemployment living standards rose for the majority of the population in the 1930s and 1980s. The governments of Baldwin and Thatcher delivered enough prosperity for enough of the time to retain electoral support.
"But this success also depended on presenting Labour as 'profligate' and 'incompetent'. The Conservatives won elections in the 1930s and 1980s by claiming relative rather than absolute governing competence: under Labour, they argued, things would be much worse. This line of attack need not depend on objective economic success – as the 1992 election showed."
McClymont and Jackson argue the Tories could triumph at the next election if they succeed in defining the key challenge as spending cuts.
"If the key political challenge facing the country over the long term becomes defined as cutting public spending, then the Conservatives are more likely to prosper. Prolonged austerity reinforces this perception, rather than undermining it. The Conservatives could potentially be in a win-win situation. If growth does ultimately return and an end to austerity heaves into view, then they can pledge tax cuts rather than a return to pre-crisis levels of spending."
A successful Tory strategy could reverse one of the most important achievements of Tony Blair and Gordon Brown which led to three Labour election victories – the warning that tax cuts would damage public services – they argue. The authors say Labour can win if it positions itself as the party of "economic renewal and growth", as it did under Clement Attlee in 1945, Harold Wilson in 1964 and Tony Blair in 1997.
In a Guardian article today the authors argue that the Tories will face a problem in "repeating the trick" of the past because, unlike in the 1930s, few people will benefit during Britain's "long, slow and anaemic" recovery. "The historical record suggests Ed Miliband's decision to focus on the plight of the 'squeezed middle' and need for a new growth model for the British economy was the right political judgment," they write. "Labour can sidestep Cameron's political trap by mounting an electoral appeal based on increasing private-sector growth and improving living standards for the majority, rather than a simple defence of public spending."
In their pamphlet McClymont and Jackson say Labour must put forward a more convincing strategy for private sector growth than the Conservatives, as Miliband started to do in his conference speech.
"A key element of a credible growth strategy would need to be a widely supported active industrial policy. In this way Labour can evade the trap of the 'tax and spend' argument of 1992, by making the key measure of governing competence the creation of new and sustainable jobs that improve living standards. Labour is more comfortable than the Conservatives with the idea of an activist state: the Conservatives have reason to fear a political contest organised around which party can best promote growth rather than which party can best reduce spending."
They also say Labour should highlight the coalition's preference for "regressive charging mechanisms" for funding public services which contrast with Labour's more progressive alternatives. These do not necessarily require additional resources.
Government policy on higher education is described as "a spectacularly regressive graduate tax" which works out at 9% of income over £21,000. The authors praise Miliband's proposal to cut university tuition fees from £9,000 to £6,000.
McClymont and Jackson urge Labour to support families and the elderly in specific areas in ways which do not require significant additional spending. They highlight the Institute for Public Policy Research proposal for a national salary insurance scheme offering subsidised loans during a period of unemployment, to be repaid when the individual returns to work.
Harold Wilson, who unseated the last Etonian to occupy Downing Street before Cameron by pledging to lead a Britain "forged in the white heat of this revolution", is the best role model, they say – "1964, with its focus on economic under-performance and relative decline, presided over by an out of touch Tory elite, is particularly resonant given the likely electoral battleground in 2015."
The pamphlet by McClymont and Jackson is the second major intervention by Policy Network in recent weeks. Earlier this month the thinktank published a pamphlet, In the black Labour, in which former party advisers criticised the "vagueness" of the Labour leadership's deficit reduction plans.