What’s the alternative?

Radical plans to make banks pay the lion’s share towards a £7bn “push for growth”, to be unveiled by Labour on Monday, will be at the heart of Ed Miliband‘s alternative to £83bn of proposed government cuts. In his first major speech as shadow chancellor, ahead of Wednesday’s spending review, Alan Johnson will accuse the government of taking a “huge gamble with growth and jobs” by concentrating solely on deficit reduction. Johnson, who has been working closely with the new Labour leader to define a clear alternative, will say it is fundamentally unfair that cuts to child benefit should play a bigger role in reducing the deficit than the banks that did much to cause the economic crisis. In a departure from Labour’s policy at the general election, Johnson will call for a big increase in capital spending on road building and construction – probably funded by a far higher levy on banks and action against bankers’ bonuses – to boost economic activity and create jobs. – The Observer

Peter Hain is wizened counsellor to young king Ed, or gives that impression at least. The two are close, which makes Hain’s recent comments on tax noteworthy. Hain describes universal benefit as ‘non-negotiable’, adding: “If you start driving a coach and horses through universality you’re effectively saying to middle Britain, ‘you’ve got no stake in the welfare state.’ I think the Tories and Liberals are making a very big mistake on child benefit. There’s an answer to people on higher incomes and that’s they pay higher taxes. And that is the answer to squaring that circle.” Miliband is determined to defend universal benefit regardless of cost and he also favours a 50:50 split between tax hikes and spending cuts to reduce the deficit – a policy that would require £61bn to be raised in tax. Miliband and Alan Johnson will reveal Labour’s economic policy on Monday; expect it contain a fetid dram of Old Labour. – The Spectator

Osborne sharpens the knife

Even before Chancellor George Osborne makes his announcement, we know it is going to be terrible. What we aren’t yet sure of is the scale of the harshest blows. What has become clear is that the most vulnerable will suffer the most. In particular, the elderly and those in poverty are going to be hit hardest. Yes, the middle classes will be affected but those who can least afford to lose anything will be crippled. Although the Government was panicked by last week’s Sunday Mirror revelation about pensioners’ allowances being slashed and swiftly backed off, older people will still be targeted. – The Mirror

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Hain on tax

One of Ed Miliband’s closest allies has backed a tax increase for higher earners as Labour prepares to reveal new details about his plan to deal with Britain’s budget deficit. Peter Hain, who was part of Mr Miliband’s leadership campaign team, said an increase in tax on the wealthy would “square the circle”, allowing Labour to avoid the Coalition Government’s controversial cut to child benefit. His intervention comes as the new shadow Chancellor, Alan Johnson, prepares to make his first major speech in the role on Monday. Mr Johnson has also agreed to television interviews over the weekend. – The Independent

Mr Hain told website Labour Uncut: “I think the Tories and Liberals are making a very big mistake on child benefit. “There’s an answer to people on higher incomes – they pay higher taxes. And that is the answer to squaring that circle.” Former Welsh Secretary Mr Hain is party leader Red Ed’s new policy chief. He also hinted that new Shadow Chancellor Alan Johnson may be overruled by Mr Miliband to set the party’s economic policy. It could mean paying back the deficit more slowly than Mr Johnson would like. Mr Hain said: “People forget Ed is an economist. He’s got a very clear idea of where he wants to go on the economy and the deficit and we’ll set that out. We’ll both be offering a serious alternative.” – The Sun

Ed’s week

Reflecting on his performance in the Commons, Mr Miliband is pleased. He wants to set a new tone, although he stops short of falling into the same trap as the Prime Minister who pledged to end “Punch and Judy” politics when he became Leader of the Opposition, only to fail miserably. “I want to use PMQs to ask serious questions the country wants to know the answer to, because I don’t think people particularly want a lot of political point scoring,” he says. “I think it’s unrealistic to say you’re never going to have that – and I didn’t say that – but I think you need it to be a place where serious issues get debated. It went well this week, it’s a long game and we’ll see what happens in future weeks.” In preparation for the big event, Mr Miliband’s team considered the topics they could raise and plumped for child benefit, a raid on the incomes of higher-rate taxpayers in middle England – voters whose support he will need to win power. – The Yorkshire Post

The press’ attention was temporarily distracted on Wednesday, when Ed Miliband entered the Commons for his first PMQs as opposition leader. The press gallery was stunned to find the man they had patronised for two weeks easily beat David Cameron in a confident and businesslike manner. – Politics.co.uk

No one would begrudge Ed Miliband the plaudits for his fine first performance at PMQs. He has made a good start and seemed to take David Cameron by surprise. The Labour leader has a small, under-resourced team, which has been devoted much of the last week to preparing him for the task of his first confrontation with the Prime MInister. This is simply not sustainable. The weekly duel, terrifying though it may be, cannot come to dominate his thinking – however good he comes to be at it. – The Spectator

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Spending Review

When Mr Osborne moved into No 11 in May, he could plausibly argue that the UK and its major trading partners were through the worst of the slump and on a straight road to recovery. Couple that with the panic over European government debt, and coalition ministers had (in their eyes) sufficient grounds to argue that they needed a serious plan to tackle government borrowing – and needed it now. Both parts of that argument no longer look so solid. The undoubtedly real alarm over government debt that gripped international markets this spring has eased. And besides, the truth is that the UK – a major economy with a good credit history, whose deficit is largely financed by domestic investors – was never in the same boat as Greece or Iceland. Meanwhile, the economic outlook has become considerably bleaker. – The Guardian

The government wants to eliminate the UK’s budget deficit – which currently stands at 10 per cent of GDP – by 2015. To that end, the coalition has decided to slash £83bn from its budget, with cuts to government departments of up to 25 per cent expected. On October 20, Chancellor George Osborne will deliver his comprehensive spending review, which will reveal where the axe will fall. But how bad could it be… – The First Post

Britain’s economy is still in “grave danger” of collapse, Ken Clarke warned yesterday. The Justice Minister also said Wednesday’s spending review will be “the most dramatic in living memory”. He added: “We’re in grave danger of financial collapse. We’re not out of the woods yet.” Mr Clarke, speaking in Derbyshire, said the debt crisis was unprecedented and people must brace themselves for tough economic times. His comments put him at odds with the Prime Minister who said two weeks ago the economy was “out of danger”. – The Mirror

Team Ed

A leader’s back-room team is as important, and sometimes as famous, as his front-line personnel. Alastair Campbell and Philip Gould were indispensable to Tony Blair; Steve Hilton and Andy Coulson are closer to David Cameron than most cabinet ministers. Among the most senior members of Mr Miliband’s kitchen cabinet is Stewart Wood, an academic and aide to Mr Brown who advises on policy and media strategy. Greg Beales, who also served Mr Brown, helps Mr Miliband with policy and speeches. Gatekeepers include Polly Billington, a former journalist, and Katie Myler, a ministerial adviser when Labour was in office. They are a strikingly young bunch. Mr Miliband owes his leadership in part to grizzled trade-union bosses, but his most ardent supporters have always been youthful idealists who hear echoes of Barack Obama in his talk of “a new generation”. The Tories, who privately think Mr Miliband will have to draft in some more heavyweights before long, are unworried. – The Economist

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