John McTernan: Miliband playing follow the leader

At the height of power, Tony Blair and Peter Mandelson orchestrated a new concept in Labour politics. Picture: PA

Hands up if you like the big banks? I don’t mean you Mr Goodwin, put your hand down. Anyone else? Nope, no takers. What about energy companies then? Happy with the bills you pay? Nope. Me neither. And, the $64 million question. Does this make you anti-business? Thought not. It just makes you part of modern, mainstream thinking. You’re for the market – it creates wealth and jobs. But you oppose abuse of markets by businesses which face too little competition because they have successfully gamed the regulator. While we all pay the price.

Now, I love Peter Mandelson this side of idolatry, but he is wrong to question Ed Miliband’s promise to freeze energy prices for 18 months. It is not an anti-business policy, it’s an attack on vested interests. And attacking vested interests is what New Labour stood for, and is what all progressive parties are – in the end – for. But all parties also need renewal. Different times demand different solutions. That is why Ed Balls and Ed Miliband set out new policies and approaches his week. But they have not betrayed the New Labour tradition – they are, in a funny kind of way, its continuation. Put simply they have learned from Tony Blair and Gordon Brown as, in their turn, Gordon and Tony learned from Bill Clinton. The central lessons? Political parties win from the centre, and should govern pragmatically. It is important to see what Mr Balls and Mr Miliband set out at Labour Party conference in that context.

The two Eds made a bold bid for the centre ground. I know that is not how right-wing commentators have described it, but what Labour are aiming for is to secure the support of Middle Britain. It is important to understand that the most influential party in current British politics is Ukip, notwithstanding their disastrous party conference. Their influence on David Cameron is obvious. He has lurched to the right, but more importantly he has abandoned optimism. Tactically what the Tories have done is understandable – their vote is bleeding to Ukip and they have to staunch that flow. (And if you are going to articulate a populism of the right there is no-one better to guide you than Lynton Crosby.) But strategically it offers a huge opportunity for Labour – one which Ed Miliband is seizing.

“Britain can do better” is a brilliant slogan. It captures the anger and discontent that stalks Britain and yet it channels that towards an optimism about the future – and a patriotism too. This is Mr Miliband’s considered response to the rise of Ukip. Not for him a trimming to the right, dragged in the wake of the government. Instead, the insight that a populism of the right should be met by a populism of the left, not by triangulation. Nowhere is this better seen that in his pledge to abolish the bedroom tax. Classic Clintonian triangulation would have said – by all means reverse a benefit cut, but balance it with matching tightening of welfare elsewhere. Miliband has not done this, instead he has gone for the jugular. He is elevating the bedroom tax to the status of the poll tax – an emblem of who the Tories really are. It took all of Mr Cameron’s undoubted charisma, plus his promise not to cut the NHS, to persuade voters that the Conservatives were no longer the “nasty party” and were safe to form a government. In the struggle to slash Ukip’s support, all that work has been thrown away. And Ed’s aim is to make Mr Cameron pay the price.

The key to understanding Labour’s strategy is to understand the “squeezed middle”. The Fabian Society did some important work shortly after the last election which identified this large group of voters – most of Middle Britain – who felt that they played by the rules, worked and contributed, did the right thing but got nothing in return. These voters hated the bankers getting their bonuses after nearly destroying the economy just as much as they resented dole cheats. This is where the attack on Miliband “lurching to the left” founders – we do not live in the 1970s. It is possible to say that some capitalism is bad without signing up for the IMG or the SWP. Voters know this – and are looking for a champion. Ed knows this – and will be their voice.

This is the key to the economic strategy which was set out this week by Ed Balls. The frame will be cost of living. The question will be an echo of Ronald Reagan’s famous jibe to Jimmy Carter – “do you feel better off today than you did when the coalition government was formed?” With a large helping of Clint Eastwood – “well, do ya?” The beauty of this question is that, even at the best of times, voters are ungrateful, never thanking you for what you have done for them. But these are not the best of times – living standards have fallen for 38 out of the last 39 months. And are set to continue falling up until the election and beyond. So the natural thrawn-ness of voters is allied to reality. And for all that Mr Cameron and Mr Osborne bluster that it would have been worse under Labour, they have two problems. One is that they have boasted loud and long about the need for austerity, the necessity of hard decisions. The thing is, in the end, if you cause the pain you get the blame. The other is that they are arguing an alternative reality that never materialised, and the actual always trumps the counterfactual.

This is the context for Labour’s pledge on energy prices – a practical thing that a government can actually do. Yet a modest one too. Mr Balls and Mr Miliband have no intention of alarming the lieges. They want to change the frame from economic management, where Labour are mistrusted, to cost of living, where the Tories are delivering the longest fall in living standards since the 19th century. But they do not want to give any ground on tax and spend. New spending will be strictly limited

Mr Balls has moved very close to pledging to match the coalition’s spending plans with the promise that there would be no additional borrowing to support current spending. Though it is very careful wording indeed. Laying the groundwork for a vast boost to capital spending on infrastructure to jump-start the economy. HS2, the high speed rail link from London to Birmingham and beyond, is already being measured up. A nice stash of cash to switch straight to housebuilding. Miliband’s pledge to get back to Britain building 200,000 houses a year by 2020 is another populist appeal. For the working class it’s jobs and apprenticeships. For the aspirational it’s a way to afford getting on to the housing ladder. For the middle class it’s homes for their children.

But perhaps the most serious declaration of intent was when Ed Miliband confronted the biggest single challenge facing him. The view that he does not look like a prime minister. With self-deprecating humour he acknowledged the point. But then turned it on its head. What’s actually the most important thing he asked. To look like a prime minister? Or to act like one? It’s one thing to be strong, but how do you use that strength? Ed reminded people he stood up against Rupert Murdoch. That he held Britain back from a disastrous invasion of Syria. That he would save the NHS. He would be strong for the weak, not strong against them.

The battleground is clear. The polls consistently say – advantage Mr Miliband. It’s game on with a vengeance.