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Labour bets on living standards being key issue as 2015 elections near Labour bets on living standards being key issue as 2015 elections near
(about 14 hours later)
Labour's decision to double-down on squeezed living standards – as exemplified by last week's appointment of Obama adviser David Axelrod – reflects a gamble at the top of the party that the issue will continue to resonate despite what is expected to be a daily drumbeat of better economic news.Labour's decision to double-down on squeezed living standards – as exemplified by last week's appointment of Obama adviser David Axelrod – reflects a gamble at the top of the party that the issue will continue to resonate despite what is expected to be a daily drumbeat of better economic news.
Party officials have discussed at length the so-called "crossover" – the moment when wages rose faster than prices – and rejected any suggestion that it meant the living standards agenda had reached political or intellectual exhaustion. They believe the subject is a symbol of an economy that is not working for most people, opening a wider argument about a government for the elite.Party officials have discussed at length the so-called "crossover" – the moment when wages rose faster than prices – and rejected any suggestion that it meant the living standards agenda had reached political or intellectual exhaustion. They believe the subject is a symbol of an economy that is not working for most people, opening a wider argument about a government for the elite.
Labour's persistence may be justified by recent polling: YouGov published figures at the weekend showing 84% agree that "in the last few years most people's incomes have not kept pace with rising prices" – a figure that the latest wage and inflation figures last week have not altered.Labour's persistence may be justified by recent polling: YouGov published figures at the weekend showing 84% agree that "in the last few years most people's incomes have not kept pace with rising prices" – a figure that the latest wage and inflation figures last week have not altered.
Those that follow the living standards debate most closely, such as the thinktank Resolution Foundation, say there is no chance that over the five years of this parliament living standards per head will have risen.Those that follow the living standards debate most closely, such as the thinktank Resolution Foundation, say there is no chance that over the five years of this parliament living standards per head will have risen.
The two big flaws for Miliband – which his staff were warned were likely to happen – are first that wages will rise faster than prices in most of the final year of the parliament, and second that few Britons directly blame the government for the living standards squeeze.The two big flaws for Miliband – which his staff were warned were likely to happen – are first that wages will rise faster than prices in most of the final year of the parliament, and second that few Britons directly blame the government for the living standards squeeze.
YouGov's polling this weekend shows only 21% blame the present government for this, while 22% blame the last Labour government. Peter Kellner, the YouGov President wrote "Most people, 57%, don't take sides: they blame both parties, or aren't sure, or don't think there is a crisis, or fear the problem is beyond the control of politicians".YouGov's polling this weekend shows only 21% blame the present government for this, while 22% blame the last Labour government. Peter Kellner, the YouGov President wrote "Most people, 57%, don't take sides: they blame both parties, or aren't sure, or don't think there is a crisis, or fear the problem is beyond the control of politicians".
According to Kellner, the figures then get worse for Labour. He wrote: "On three aspects where Labour held clear leads six months ago, the race has tightened: providing more jobs (Labour lead down from 8% to 1%), keeping prices down (lead down from 6% to 1%) and "improving the standards of living for people like you" (9% lead down to 4%).According to Kellner, the figures then get worse for Labour. He wrote: "On three aspects where Labour held clear leads six months ago, the race has tightened: providing more jobs (Labour lead down from 8% to 1%), keeping prices down (lead down from 6% to 1%) and "improving the standards of living for people like you" (9% lead down to 4%).
"In contrast, two big Tory leads have grown even bigger – on managing the economy (lead up from 15% to 21%) and tackling the government's deficit (lead up from 22% to 29%).""In contrast, two big Tory leads have grown even bigger – on managing the economy (lead up from 15% to 21%) and tackling the government's deficit (lead up from 22% to 29%)."
Of course anyone who sets their political compass according to the oscillating mood of the YouGov daily tracker, will be seriously disorientated. But one Labour insider who has pressed for the party to say more about the deficit for two years concedes the party has no choice but to stick with the current script. He said: "Until recently I would have said there are centrifugal forces at every general election that drive the agenda onto tax, spend and the deficit. I would have also said talking only living standards and high prices will look like to a lot of the electorate as way of avoiding the main subject – the deficit – and if voters can sniff out evasion, they will act accordingly.Of course anyone who sets their political compass according to the oscillating mood of the YouGov daily tracker, will be seriously disorientated. But one Labour insider who has pressed for the party to say more about the deficit for two years concedes the party has no choice but to stick with the current script. He said: "Until recently I would have said there are centrifugal forces at every general election that drive the agenda onto tax, spend and the deficit. I would have also said talking only living standards and high prices will look like to a lot of the electorate as way of avoiding the main subject – the deficit – and if voters can sniff out evasion, they will act accordingly.
"There is a danger than Labour will try to avoid the subject by talking about a zero based spending review after the election and some tax rises. Talking about closing a few fire stations is not really enough. But now I think Labour should stick with living standards."The bigger prize for Labour is to broaden "living standards" into something more than a moan about high prices, but a wider discussion about the recovery, the inbuilt unfairness of modern capitalism and why the link between the wealth of the country as a whole and people's own finances, has broken."There is a danger than Labour will try to avoid the subject by talking about a zero based spending review after the election and some tax rises. Talking about closing a few fire stations is not really enough. But now I think Labour should stick with living standards."The bigger prize for Labour is to broaden "living standards" into something more than a moan about high prices, but a wider discussion about the recovery, the inbuilt unfairness of modern capitalism and why the link between the wealth of the country as a whole and people's own finances, has broken.
It is something Obama and Axelrod have articulated in their attacks on the way the top 1% have drifted away from the rest of society.It is something Obama and Axelrod have articulated in their attacks on the way the top 1% have drifted away from the rest of society.
Miliband and his chief thinker Lord Stewart Wood, have tried to articulate something similar, but have so far held back fearful of something that ends up as bash the rich.Miliband and his chief thinker Lord Stewart Wood, have tried to articulate something similar, but have so far held back fearful of something that ends up as bash the rich.
The impression now is the Left across Europe is coming to a similar analysis about inequality, and that without structural remedial action this will be another recovery for the rich. Policy Network, the thinktank probably closest to social democratic thinking in Europe, is holding a conference on Thursdayin Amsterdam on what it describes as the emergence of a "5-75-20" society, one in which an increasing share of GDP is flowing to capital at the expense of labour. The impression now is the Left across Europe is coming to a similar analysis about inequality, and that without structural remedial action this will be another recovery for the rich. Policy Network, the thinktank probably closest to social democratic thinking in Europe, is holding a conference on Thursday in Amsterdam on what it describes as the emergence of a "5-75-20" society, one in which an increasing share of GDP is flowing to capital at the expense of labour.
By this it means roughly 5% at the top – professionals working in finance and those who inherit wealth – are enjoying 'runaway' rewards as asset prices and returns to wealth have soared while there are 20% at the 'bottom' of society are at risk of permanent marginalisation.By this it means roughly 5% at the top – professionals working in finance and those who inherit wealth – are enjoying 'runaway' rewards as asset prices and returns to wealth have soared while there are 20% at the 'bottom' of society are at risk of permanent marginalisation.
The middle 75% are usually in work or have retirement incomes, but are apprehensive: they not only comprise "blue-collar" employees threatened by outsourcing, but middle-class professionals who fear their jobs will be next.The middle 75% are usually in work or have retirement incomes, but are apprehensive: they not only comprise "blue-collar" employees threatened by outsourcing, but middle-class professionals who fear their jobs will be next.
The Policy Network argues a stable governing majority cannot be fashioned on the basis of appealing simply to the bottom 20%, even with factoring in the votes of an altruistic middle class. Nor can a credible electoral programme be devised for a strategy of redistribution from the elite: from conventional sources of income tax, there simply isn't enough money to spread around.The Policy Network argues a stable governing majority cannot be fashioned on the basis of appealing simply to the bottom 20%, even with factoring in the votes of an altruistic middle class. Nor can a credible electoral programme be devised for a strategy of redistribution from the elite: from conventional sources of income tax, there simply isn't enough money to spread around.
"Social democracy's new majority has to be built on something more radical than compensatory redistribution," it concludes."Social democracy's new majority has to be built on something more radical than compensatory redistribution," it concludes.
These arguments have been given intellectual historical ballast by Thomas Piketty, the French economist author of Capital in the Twenty-First Century, a 700 page journey through the history of wages and incomes laced with graphs, Jane Austen and Balzac. He argues there is a deep historical tendency for the rate of return on capital to outstrip the overall rate of economic growth, leading to greater and greater concentrations of wealth at the very top. Piketty writes: In the book the economist warns "There's a real risk that we will wake up to find a society even more inegalitarian than that of the 19th century, because it will combine the arbitrariness of inherited inequalities with a meritocratic discourse that makes the 'losers' responsible for their situation," Piketty writes.These arguments have been given intellectual historical ballast by Thomas Piketty, the French economist author of Capital in the Twenty-First Century, a 700 page journey through the history of wages and incomes laced with graphs, Jane Austen and Balzac. He argues there is a deep historical tendency for the rate of return on capital to outstrip the overall rate of economic growth, leading to greater and greater concentrations of wealth at the very top. Piketty writes: In the book the economist warns "There's a real risk that we will wake up to find a society even more inegalitarian than that of the 19th century, because it will combine the arbitrariness of inherited inequalities with a meritocratic discourse that makes the 'losers' responsible for their situation," Piketty writes.
Piketty has attracted the interest of Milbandites and is due to give lectures here next week at left leaning thinktanks. A book tour in New York has seen him propelled to number one on Amazon's best seller list, pushing aside science fiction mega-hit "Divergent" .Piketty has attracted the interest of Milbandites and is due to give lectures here next week at left leaning thinktanks. A book tour in New York has seen him propelled to number one on Amazon's best seller list, pushing aside science fiction mega-hit "Divergent" .
Selling a book about capitalism's iniquities to liberal New Yorkers may not be the same as winning over a sceptical swing voter in Milton Keynes, but either way Miliband has made his choice. This will, if he has his way, be the living standards election.Selling a book about capitalism's iniquities to liberal New Yorkers may not be the same as winning over a sceptical swing voter in Milton Keynes, but either way Miliband has made his choice. This will, if he has his way, be the living standards election.