Ed Miliband has placed a significant rise in the minimum wage to £8 an hour by the time of the next election at the heart of Labour’s manifesto, as he pledged to end “the tired old idea” that society should just look after the rich.
In a confident performance at the launch of the manifesto, Miliband said that pay and insecurity were holding Britain back and that Labour would deliver the highest ever minimum wage as a proportion of average earnings.
The pledge to accelerate the planned rise was one of the few new policies in the manifesto as Labour acknowledged the challenging economic climate by steering clear of “glitzy” announcements to focus on credibility.
The manifesto highlighted the need to balance the books, pledging that a Labour government would not resort to any extra borrowing. “Every promise we make is a promise we can pay for,” Miliband said, portraying Labour as the party of fiscal responsibility.
The Labour leader said the Tories had become the fiscally irresponsible party, estimating that David Cameron and George Osborne had racked up £20bn in unfunded spending commitments in recent weeks.
Miliband cited Tory pledges on rail fares, the NHS and a series of unfunded tax cuts. “By my calculations that adds up to about £20bn, and they have no idea of where a penny of it is coming from. The Conservative party have got to account for why they are now the irresponsible party in Britain.”
Labour came under fire from the Institute for Fiscal Studies (IFS), however, which said that people would not know what they were voting for on the basis of the party’s fiscal plans.
Paul Johnson, the IFS director, said that Labour’s decision to give itself until 2020 to eliminate the current budget deficit meant it could avoid avoid £18bn of spending cuts over the next three years. The Tories and Lib Dems are committed to such cuts because they said they would eliminate the current and capital budget deficits by 2017-18.
The current budget generally covers day-to-day government spending. The capital budget covers investment in infrastructure projects. In his emergency budget in 2010 Osborne pledged to balance the current budget.
Speaking on the Daily Politics on BBC2, Johnson said of Labour’s fiscal plans: “It allows them to say: ‘Well, we would be cutting very little, but also that we would be cutting.’ But it really makes a big difference, there’s a huge difference between £18bn of cuts over the next three years and no cuts. Literally we would not know what we were voting for if we were going to vote for Labour.”
Nick Clegg ran into trouble by likening Labour’s fiscal plans to an alcoholic’s relationship with a bottle of vodka. The deputy prime minister said: “The Labour party saying they have no plans for additional borrowing is like an alcoholic who consumes a bottle of vodka every day, saying they have no plans to drink more vodka. It’s a dangerous addiction and the Labour party have no plan and no date by which to clear the decks, wipe the slate clean and deal with the deficit.”
Miliband moved to pre-empt such concerns by insisting that tackling the deficit would be his main priority in office. He would be more fiscally conservative than Tony Blair, he said.
“I am going into an election doing what no other Labour leader has done which is saying outside protected areas - the NHS, education, international development - spending is going to fall until the books are balanced. I couldn’t be clearer that we are going to cut the deficit every year, that we are going to have a surplus on the current budget as soon as possible in the next parliament and that we are going to have the national debt falling.”
Labour is running a more benign deficit reduction plan in part to ensure it can guarantee tax credits, one of its key measures to tackle child poverty. Setting out a major dividing line with the Tories, Miliband said: “For the 4.5 million people on tax credits, we pledge today to protect them, not cut them as the Tories have said they would.”
Miliband placed his deficit reduction plan on the first page of the manifesto, with a new “budget responsibility lock”, but he showed in his speech and in key parts of the manifesto that a Labour government would remain deeply attached to the core mission of his leadership. That is to tackle the historically low level of wages – the result of inflation outstripping pay increases during the recession and its aftermath – which have hit living standards.
“We will set new ambitions for the minimum wage. A minimum wage by 2019 reaching its highest ever proportion of average earnings, rising to more than £8 an hour, because we are determined to write the next chapter in the fight to end low pay.
In an impassioned section of his speech, Miliband said that only Labour understood that low wages were bad, not just for those receiving them but for the country.
“The Tories would have you believe low pay is necessary for Britain to succeed. Friends, that is wrong. Low pay and insecurity stop us succeeding. They hold back working people and hold back our country.”
In the final part of his speech, Miliband said: “I am ready; ready to put an end to the tired old idea that as long as we look after the rich and powerful we will all be OK; ready to put into practice the truth that it is only when working people succeed that Britain succeeds.”
The Tories downplayed the announcement on the minimum wage, which rose from £6.31 to £6.50 in October. They said the Tories had pledged to raise it to £8 by 2020 and that Labour had always suggested it would do this by the time of the next election. The last rise in the minimum wage before the May 2020 election will be in October 2019. This suggests that the two parties may be arguing over a year’s difference in the rise.
Miliband was on noticeably relaxed form as he launched the manifesto at the old Granada Television studios in Manchester. He moved from grand statements about tearing up old assumptions, to the Tories’ failed experiments, and mocking the prime minister for failing to stand up to powerful forces such as Rupert Murdoch.
The audience cheered loudly as Miliband said: “Who do you want standing up for you? The answer will never be David Cameron. Because he’s strong at standing up to the weak, but always weak in standing up to the strong.
“Whoever is making their case, I will always stand up for you. With me as prime minister, no powerful interest will outweigh the interests of working people.”
Some of the biggest cheers came when Miliband pledged to end the non-domicile tax status and move the 45p upper rate of income tax back to 50p.
Michael Gove, the Tory chief whip, said the Labour manifesto was irrelevant because Miliband would depend on the support of the SNP to enter Downing Street.
Gove told the BBC: “It’s got no credibility at all. We know every page in Labour’s manifesto will be subject to sign off by Alex Salmond and Nicola Sturgeon. Labour cannot get into Downing Street except on the coattails of the Scottish National party, so every promise they make today is subject to veto or endorsement by the SNP. Labour proposals are not funded and they are not underwritten by the credibility of delivering a strong economy.”
