1. Extend the narrative on injecting competition in dysfunctional markets
Breaking up concentrations of power in the economy has been a continual theme in the Labour leader’s vision of a new economy. Injecting greater competition into a banking system in which four institutions control 85 per cent lending to SMEs builds on the party’s energy price pledge, and animates Miliband’s strategic divide between ‘those who want to defend broken markets and those who want to reform them’. Today’s speech needs to show further that failure to reform anti-competitive markets keeps in place a central pillar of the UK’s pre-2008 economic model.
2. Seize the regional agenda
Labour needs a radical agenda for the UK’s regions, because as well as developing in a particular sector, the financial crisis was also inherently geographical. Financial services were concentrated in London and the South East, and the impact of recession will be to entrench uneven patterns of growth and prosperity.
A speech on the failures of the UK’s banking system – to live up to the principle of competition, to channel sufficient finance to the real economy – provides an opportunity seize the mantle on the regions.
3. Build on the economic reform programme
Taking on vested interests has been a helpful tool to show how Labour intends to make reforms that will serve the real economy and begin to redress its long standing power imbalances. But Labour’s economic agenda is also richer than using the state to ensure competition, and this morning speech needs to show how.
It should begin to show how its stance on anti-competitive markets is one part of a more radical agenda: one committed to reforming the structures which militate against long term, sustainable growth in the British economy, and which incentivises a short termist psychology of speculation and exit.
4. Explain how this structural economic reform is related to the cost of living crisis
By signalling that he would be willing to commit to an above inflation increase in the national minimum wage, George Osborne has made a move in the debate on the cost of living. Now is the time for Ed MIliband to show that the distinction between short term measures to ease the pressure on living standards and fundamental reform to the drivers of the British economy is a false one.
Living standards have come under further pressure by the Government’s distributionally unequal approach to reducing the deficit. But this morning’s speech should also show that the crisis which afflicts many people’s living standards has a longer history than the Coalition.
It is a crisis borne of an economic model which has delivered under-investment, a racing away of the top from the middle, and spatially uneven patterns of growth which only long term economic reform can change.
5. From statistics to real lives
As the chart below shows, the financial crisis has dealt a blow to average household incomes which had faltered prior to 2008. By adopting a strategy which aims to reshape what economic growth means for the prosperity of normal families, Ed Miliband has set the foundations of an agenda to reshape the UK’s political economy.
But as valid as this insight is, today’s speech will not achieve the cut through Labour need if it is one animated by statistical abstractions and distributional impact assessments. Miliband’s speech needs to connect this analysis of the symptoms of an economy which does not serve normal households with meaningful narrative accounts of the kind of economy they wish to see. Retreating to a debate about macroeconomics and managerialism and not speaking about the lived experience of those feeling the squeeze will do little to boost Labour’s economic credibility.