When Ed Miliband marches against austerity tomorrow, will he answer the £10bn question?

by Atul Hatwal

Tomorrow, when Ed Miliband attends the TUC’s march against austerity, he will be asked a simple question.

The answer will help determine whether One Nation Labour is an idea that will resonate with the public or just an ephemeral phrase du jour:

Ed, do you back Unite, Unison and the GMB who have just submitted a claim for a 13% rise in wages on behalf of 1.6 million local government workers?

Yes or no?

No, don’t use a parsed formulation of words involving the phrase “tough choices” while avoiding a clear position.

Do not obfuscate, this isn’t a demand to write the next manifesto several years before the next election, it’s just a question that cannot wait three years for an answer.

Neither is it good enough to say that this is a matter for local government as if the leader of the Labour party is somehow legally proscribed from having an opinion.

For the unions, in a very practical sense, this wage claim is part of the alternative to austerity and it is a question they will ask of Labour’s leader, face to face, on Saturday.

Their local government members have faced real terms pay cuts, year on year since 2009. 13% sounds a lot for a wage claim but it would only recoup the real terms losses (e.g. the difference between inflation and the nominal pay rises awarded) suffered since 2009.

What is the point of the union movement if it cannot protect its members from never-ending pay cuts?

Needless to say, local authorities, already under the cosh, are pointing at empty coffers. They have had to take real terms funding cuts of 10% between 2009/10 and 2011/12 and a 13% pay rise for staff would comprehensively blow their budgets.

The only way they could fund such an exceptional settlement would be if central government eased the pace and depth of local authority cuts.

Which brings us back to the quandary facing Ed Miliband, Labour’s prime-minister-in-waiting: what is his view? If he were prime minister today, how would he answer the question?

If his answer is to back the wage claim then we can assume that as PM he would free up the funds for local authorities to meet their new commitments.

On the positive side, with this course of action Ed Miliband would be cheered to the heavens on Saturday.

But he might not want to watch the news when he got home from the march. Probably best to skip straight to the X-Factor and Strictly.

As deserving as local government workers are, nothing comes for free. Based on a median wage in local government in 2011/12 of £24,312 the cost of the pay settlement would be just over £5bn a year. Given it is due to apply from April 2013, by the time of the next election it would have cost £10bn.

At a time when debt is spiralling, largely as a result of George Osborne’s disastrous policies, an extra £10bn of spending without any balancing revenue raising measures would be an extraordinary spending commitment.

The Tories’ attack on Labour’s spending plans and the resulting impact on the deficit would hit like a tsunami. Charges of Labour being in the pockets of union paymasters would pepper the bulletins. The basic maths of a pay rise that was 6 times the rate of inflation would drown out explanations about balancing past pay cuts.

For the public, the majority of whom have faced similar wage freezes in the private sector but without any prospect of a comparable pay rise, the narrative about Labour would be clear: this is not a One Nation party, but one that would bankrupt the country to look after its vested interests.

Not true and not fair, but nonetheless it is the story that the press would hammer home.

So does this mean Ed will brave the boos and heckles to say he does not back the claim and urge pay restraint?


Beyond the unpleasantness of the catcalls on Saturday, the consequences of falling out with the unions would be politically lethal for him personally.

There would be the immediate financial threat to the party. Withdrawal of funding by the unions as punishment would hit a debt ridden party hard.

But as unwelcome as it would be, this wouldn’t necessarily be unmanageable. A slimmed down operation and stronger private sector fundraising could help tide the party over.

Much more dangerous would be the impact of furious union leaders mobilising their allies across the Labour movement to destabilise the Ed Miliband. The Labour leader is far from unassailable and without the committed support of his left flank, would be vulnerable to a shadow cabinet putsch.

Discontent with the leader is never far from the surface among shadow ministers, whether from the ideologically opposed, the ambitious or both. At Labour conference earlier this month it was bubbling away under the surface.

This is the existential threat to Ed Miliband’s leadership. It is why, on Saturday, he will do what he always does in these situations and say nothing. He will speak and use lots of words, but on the main issue, he will not commit either way.

In microcosm, this is the Labour leader’s problem on almost all economic policy.

He is trapped. The middle ground has been vacated by the Tories who have drifted off to the right, but Ed Miliband cannot take the policy steps towards the centre to claim it and make his rhetoric about One Nation Labour a practical reality.

The unions are forcefully pulling him in the opposite direction to deliver for their members. Because of his political positioning within the party and reliance on their support, Miliband cannot simply disregard their views. Without the political bulwark of the left and the unions, the shadow cabinet sharks would be circling.

So when Ed marches tomorrow, on this issue of public sector pay, the blank sheet of paper where policy is meant to be written will stay blank. There will be no Labour position and seems little prospect of pen being put to paper anytime soon.

Atul Hatwal is editor at Uncut

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8 Responses to “When Ed Miliband marches against austerity tomorrow, will he answer the £10bn question?”

  1. Samuel Dale says:

    Both Eds have repeatedly backed a public sector pay freeze. Jobs before pay and all that. He has already answered this question and argued with the unions about it.

    See here: http://www.bbc.co.uk/news/uk-politics-19777201

  2. Nick says:

    Forget Ed. What about you. You can tell us.

    Will you tell us who pays for this increase?

    If its companies, will that result in job losses?

    If its companies, will people saving for their pensions be hit?

    If its companies, how much extra will their customers pay? (Or will you try and claim that companies pay VAT, not people)

    Or will it be those on Min Wage paying 3,000 a year in taxes for the Fat cats in Westminster to let properties to each other at other people’s expenses

  3. The Future says:

    Oh my goodness what is the point of this website.

    Same article over and over again no matter how wrong. Still the small band of “Blairites” talking to themselves whilst the public and party move on.

    This site is dead, becuase everyone is stuck in 2010.

  4. botzarelli says:

    It doesn’t really matter what Miliband says and you’re I’m sure right that he will fudge things to say nothing very much while sounding supportive.

    If he wants to be PM he has to have the attendees at the protest believe that he’d like to say yes and would say yes if he could while at the same time he has to know that no is the right answer and the one that he’d give unflinchingly were he to be PM.

    It makes sense not to be offering an alternative budget for 2015, to an extent. But it does mean that Miliband has to spend the next 2 1/2 years giving the impression that he’d do a lot of things differently while knowing that he wouldn’t or at best, couldn’t. Perhaps it would be better to have a bit of courage and say that there are no realistic circumstances in which he could envisage signing off on a 13% public sector pay rise any time between now and 2015 (if the public finances were such as to allow this in 2015 they would pretty much have vindicated the coalition’s economic policies by outstripping their wildest dreams) and then LEAD the left towards what he believes he could realistically do.

  5. Robert says:

    I agree with others that this is a totally pointless article. Can anyone with half a brain, including the GMB and Unite, doubt what Ed Miliband’s response will be to a 13% pay claim? Atul really should go away and read some books on the relationship between trade unions and the Labour Party over the last 100 years.

  6. aragon says:

    Having fun with the above and the back of an envolope:

    Option 1: Labour Party Policy

    Pay Freeze continues in 3026 and beyond – to to Treasury 0

    Option 2: Pay Freeze ends:

    2016 2% nominal pay rise – Cost to Treasury – Low.

    Option 3: Restore pay levels.

    2016 pay rise of 13 (or 15%) Cost to treasury – ongoing 2.5Bn p.a.
    (Assumes 50% tax from income tax, NI and VAT).

    Option 4: Tories never happened.

    2016 5Bn back pay and 13-15% rise in pay: cost to Treasury 5Bn in year one, 2.5Bn p.a. ongoing (Assumes same 50% tax take).

    Ed is committed to option 1, option 2 is acceptable to all, but even option 3 looks reasonable as it injects 2.5Bn p.a. into the retail economy.

    Option 4: Well you can dream can’t you. That the Tories never happened.

    Option 3 it is then, and try and force the private sector to respond. After all a 2.5% VAT cut costs 12.5Bn.

  7. Mike Homfray says:

    Like all previous Labour leaders, Ed will face these issues when in power and is not going to be a hostage to fortune by giving any detail at this stage.

    Things have moved on …. when are you going to get real?

    David Miliband is not and will never be leader of the Labour party. Please repeat 1000 times before bedtime until it sinks in

  8. Horse says:

    You should better see Ed Miliband history Atul

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