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Ed Miliband's economic honesty will benefit Labour ... and squeeze the Lib Dems

Ed Miliband's beleaguered leadership of the Labour Party may not survive much longer but his forthright honesty in facing up to the inevitably gloomy economic backdrop to the 2015 General Election campaign should be of lasting benefit to the Labour Party.

ed-miliband1.jpgHis attempts this morning to breathe fresh life into his leadership have already been roundly mocked and his Radio 4 interview did sound rather desperate as he talked about his "inner belief' and dipped into the banal lexicon of American politics, tossing around phrases such as "Bring it on". If you look beyond that to the substance of what he said you can see the battle lines being drawn up for the next election. I don't think anything he said will unduly worry the Conservatives but the Liberal Democrats could have a real problem on their hands if Labour sticks to the Miliband line under a new leader.

His analysis of the most likely economic scenario as we go into 2015 is in line with most forecasts and his response to it is actually quite astute.

The choice in 2015 will be a grim one, rather as it was in 2010. The hopes of the Coalition Government that by 2015 the worst of the deficit cutting would have been done and that we would be seeing the first signs of the spring of economic recovery have been dashed by the Eurozone crisis. This is a far bigger blow for the Liberal Democrats than the Tories. The Lib Dems pinned their most fervent hopes on being able to detach themselves from the Tories in 2015, enabling them to say that the nasty job of cutting the deficit and setting the country back onto the road to recovery had been done. This would have given them a platform to boast about their part in securing that recovery and to set out a manifesto for the future that would offer the country undiluted Liberal Democracy. That hope has now gone.

The trap waiting for Labour
The next election will be highly polarised with the Tories arguing that the austerity programme needs to continue unabated and that they are the party to deliver it, especially if liberated from the (only mildly) restrictive confines of the Coalition Government. The trap for Labour would be to pretend that it can make all manner of promises about new spending which could not be delivered and which would merely remind the electorate of the economic disaster area that surrounded the previous Labour government. Ed Miliband has started to steer Labour away from that trap. If Labour can develop a coherent set of policies around a "fair austerity" theme then it could have the potential to win over many disillusioned Liberal Democrat voters.

Liberal_Democrats_UK_Logo.pngIt is hard to see the Liberal Democrats being able to counter the painful squeeze on their vote that an austerity election fought on these lines would exert. There is no obvious locus for them in a debate between Labour and Tory on these lines. To most people they are not a party with a strong, distinctive economic vision and are not going to be able to develop one while they are tied into the Coalition. One of the cleverest things that David Cameron did when forming the government was to give the Lib Dems the Financial Secretary to the Treasury knowing that this post would require a Liberal Democrat minister to take the lead in proposing and defending the deep cuts in public expenditure. The Lib Dems didn't help themselves by appointing David Laws to this post. His enthusiasm for swinging the public expenditure axe made George Osborne look positively restrained. Laws replacement Danny Alexander hasn't done much better as he has failed to develop a distinctive Lib Dem approach to the task, leaving his party with no option but to defend the Tory cuts at the next election.

The Tories also out manoeuvred the Lib Dems on tuition fees where they managed to saddle poor Vince Cable with the job of proposing the massive U-turn in Liberal Democrat policy on tuition fees. There is no escaping from taking responsibility for that despite attempts by some leading Liberal Democrats to argue retrospectively that the higher fees and the new system that supports them is fairer: that isn't what they told people at the last election.

This wouldn't be so bad for them if they were achieving some of their other cherished objectives such as political reform or a closer relationship with the European Union but these have all blown up in their faces.

Nick Clegg's rash charge into a referendum on the Alternative Vote was a disaster as it enabled the electorate to punish him for the betrayal over tuition fees. I don't hold out much hope for genuine reform of the House of Lords being achieved in this Parliament either.

Eurosceptic stance has boosted Cameron
Then there is Europe where Cameron has seized the first real opportunity that came his way to play the Eurosceptic card - and with some significant effect. The right of the Tory party, restless over what they were starting to see as too many concessions to their coalition partners, are now suddenly held in the palm of his hand. The wider electorate has also warmed to his Eurosceptic approach as most people fear being dragged too deep into the Euro crisis while we are still struggling with severe economic problems of our own. It has also given Cameron and Osborne a very convenient fig leaf to use as they will be able to shift some of the blame for the consequences of their draconian economic policies onto Europe while saying they are fighting the UK's corner for all they are worth.

Today might not mark the rival of Ed Miliband's leadership but he has made a good start on positioning Labour well for the next election.       

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