Labour needs to be ready to tackle the risk of a rise in interest rates hitting hard-pressed families and respond in a way that speaks to their aspirations

Throughout this parliament, Ed Miliband has prosecuted a successful argument about the cost of living. As prices have risen and wages have stagnated, Labour’s message has chimed with voters struggling to get on with little or no help from a government lauding a feeble recovery that has passed most people by.

Miliband’s success at turning complex arguments about the cost of living into easily understood pledges on energy prices, affordable rents and lower business rates have spoken directly to the politics of the kitchen table. David Cameron’s recent op-ed about living standards in the Times with Barack Obama provided no concrete counter-offer, but it was the surest sign yet that Conservative election planners know that they cannot avoid a debate about living standards in the run-up to May’s general election.

Having maintained a consistent lead on the cost of living, fighting the election on this footing is surely tempting for Labour. In spite of predictions to the contrary, Miliband’s team have shown it can go toe-to-toe with the Tories and beat them on this terrain. Though, as the recent fall in energy prices shows, Labour will need to remain nimble on its feet in order to avoid becoming a prisoner of events.

But, as a prospective party of government, Labour needs to mount a bigger argument about the future economy, beyond the short-term help that its government will offer families surviving in tough times. Miliband has been right to frame the argument as a choice between a race to the bottom with the Tories and a global race to the top with Labour. As the manifesto is unveiled in the coming weeks Labour must show that many of the policies that excite the party faithful – an £8 minimum wage, moving towards a living wage by 2020, and better and valued apprenticeships – are high minimums: the safety net, not the sum of our ambitions for Britain and the next generation.

It seems unlikely that many leading politicians would be content for their own children to earn the minimum wage (or even the living wage) and to get on to an apprenticeship in their current form. Without a full suite of policies that speak to the ambitions that families have for their children – excellent schooling, effective vocational training, access to higher education, a good job, home-ownership – Labour’s policy offer might be perceived as aspirations for other people’s kids. Labour must therefore make clear we want the best for everyone.

As Douglas Alexander argued in The Purple Book in 2011, ‘Economic credibility has to start with a real understanding of aspiration’. The much-missed David Cairns described this as ‘the conservatory principle’ – understanding the desire for a conservatory as a symbol of home and family improvement.

To achieve this, Labour must, first, set its vision for the end, not the start, of this coming parliament – a plan for re-election, as audacious as it might seem. It must show that tough economic decisions and a comprehensive plan to challenge powerful vested interests in the economy amount to a new vision for the public realm beyond the austerity years. There must be no sense that, once the economy is back on an even keel, Labour will slip into big-spending, ‘Whitehall-knows-best’ ways. Instead it will fashion a smarter state that decentralises power and supports the ambitions of people in communities across Britain.

Second, Labour’s spending plans for government need to be about more than simply cutting to be seen to be credible. Rather, they need to be clearly framed in terms of the values that will underpin Labour’s approach to tough choices. To this end, spending decisions need to be firmly rooted in the aspirations of the British people. Bill Clinton in 1992 operated under the ‘cut to invest’ mantra. More recently Labour councils have cut further to invest in service transformation. In this special edition of Progress, leader of Oldham council Jim McMahon talks to Liz Kendall and Steve Reed about transforming Oldham, both council and town. There are plenty of other examples across the country: Southwark has established the first higher education bursary scheme; Haringey has created a £20 credit union account for every new secondary school student; Leeds has set up a quality Apprenticeship Training Agency; and Plymouth has campaigned to sign 1,000 employers in the city up to offering employment to young people. Labour must show its cuts are not simply to balance the books and earn fiscal credibility, but that the spending decisions it will take clearly express its vision for a better Britain. A plan with hope and ambition would shore up Labour’s flank against the Green party and subdue its own left while winning over centrist voters.

Third, in the short term, Labour needs to be ready to tackle the risk of a rise in interest rates hitting hard-pressed families and respond in a way that speaks to their aspirations. Small changes decided by the Bank of England will have a huge impact on mortgage payments and rental agreements. One simple decision – and one which lies beyond the control of the government – could burden many families benefitting from the energy price freeze and Labour’s other policies. It might mean the cancelling of this summer’s family holiday, school trips, or the planned extension or conservatory. Labour must show it understands, anticipates and, ideally, has measures to help such families waiting in a draw somewhere.
 As Alexander says, ‘The holiday, the house … can be about far more than the material. The holiday might be the one time we get to spend the hours with our kids that our parents, home by 6pm, never questioned. The house is a project, an inheritance and a guarantee against disaster.’

Talk again in this way and its economic policy will be firmly couched in the language of aspiration – and thus what it means to have a Labour government will make sense to people’s everyday lives.

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Photo: Number 10