September 26, 2013 / 3:49 PM / 7 years ago

Britain's Labour treads narrow path between populism and prudence

* Opposition party leads in polls, but lags on economy

* Labour to fight election on ‘cost of living crisis’

* Promises to freeze fuel bills if its wins in 2015

* Attacked as ‘economic vandalism’ that will cost jobs

By Peter Griffiths

LONDON, Sept 26 (Reuters) - An attack by British opposition leader Ed Miliband on energy companies, big corporations and landowners may give him a short-term lift in the polls, but could damage his Labour party’s bid to restore its economic credibility before the 2015 election.

Miliband said a freezing of energy bills for 20 months if he replaces Conservative Prime Minister David Cameron would help curb rising prices after years of cuts, stagnation and weak wage growth. It would compensate the public for high prices resulting from a lack of effective market competition.

The declaration, at a party conference, exposed the 43-year-old son of a Marxist academic to what his rivals see as their most damaging line of attack before the election: that a Labour party flirting with traditionalist state control cannot be trusted with the world’s sixth biggest economy.

One former minister with Labour accused him of “alarming populism” that would sacrifice Britain’s wealth on the “altar of tribal socialism”. Energy firm Centrica’s biggest shareholder called it “economic vandalism”.

Centrica and another utility SSE have lost 2.7 billion pounds ($4.34 billion) in market value since Miliband’s speech to his party on Tuesday.

“This is real 1960s, 1970s socialism, whipping up people to hate business,” Digby Jones, a former head of the Confederation of British Industry who worked for Labour as an independent trade minister, told Reuters.

“He doesn’t like wealth creation, he doesn’t like entrepreneurship. It will cost millions of jobs and denude Britain of investment.”

Labour, however, enjoyed a bounce in the polls after miliband’s speech, a reflection perhaps of popular discontent over falling living standards.

A YouGov/Sun newspaper survey on Thursday put Labour on 41 percent and the Conservatives on 32. That compared to a single point Labour lead last Friday, before the speech.

The polls also show Labour trailing on the economy, however.

Miliband’s pitch also reopened old Labour internal arguments over how a party founded by socialists and unions at the turn of the last century should handle business and globalised markets.

Former minister, Peter Mandelson, one of the architects of the reforms that turned Labour into the centrist, pro-market “New Labour” movement that won three elections under Tony Blair, said it could undermine the party’s reputation.

“Perceptions of Labour policy are in danger of being taken backwards,” he told the Guardian newspaper.


While the “New Labour” reforms, including a much-vaunted commitment to economic prudence, brought electoral success after hard left policies turned voters off in the early 1980s, they alienated traditionalist core voters.

Miliband, whose personal ratings are far weaker than those of his party, had been accused of failing to explain his vision to a public that by an large does not see him yet as a future prime minister.

Supporters said his speech was an attempt to address that and widen the ideological gap between Labour and its rivals.

Critics saw it as a “lurch to the left” that could take Britain back to the 1970s, when strikes, blackouts and an IMF bailout hurt its reputation.

However, one of Blair’s closest advisers, former media chief Alastair Campbell, said Mandelson was wide of the mark.

“Peter M wrong re. energy policy being a shift to left. It is putting consumer first versus anti competitive force,” he Tweeted. “More New Deal than old Labour.”

Miliband said he was not anti-business: “I’m in favour of competition, I’m in favour of markets, but they’ve got to be effective.”

Labour, which says cuts delayed the recovery, saw its credibility undermined by the financial crisis and a record budget deficit during its time in office. Thirteen years of Labour ended in 2010 with its second worst defeat since 1918.

Labour said voters questioned in focus groups liked the energy bill freeze, plans to halt a corporation tax cut and to grab land that owners don’t develop.

“After 2010, the assumption was that we’d be out of power for two or three terms. Instead, we’ll be very competitive at the next election and have a good chance of winning,” a Labour source told Reuters.

Miliband will be helped by a split in the right-wing vote. The UK Independence Party, which wants to leave the European Union immediately, is on 11 percent, a poll said on Thursday. Much of their support comes from former Conservatives.

Three years of cuts should also give Labour a lift, while observers say Cameron has underestimated Miliband and voters’ financial hardship.

“Unless he (Cameron) can persuade voters that he’s on their side, there are enough left-wing voters in Britain to elect the most left-wing government of modern times,” commentator Tim Montgomerie wrote in the Times.

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