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Ed Miliband has strengthened his message to voters but needs to offer details

Joe Wright, 24 September 2014

Yesterday’s keynote conference speech by the Labour Leader Ed Miliband contained a lot for policy analysts to chew on during the coming months. Though the speech received a frosty reception this morning, especially in light of his accidental omission of sections on deficit reduction and immigration, it did its job of shoring up well-established Labour priorities: reforming the NHS and the long drawn-out suppression of living standards. To address the latter, Miliband has promised to raise the national minimum wage to eight pounds per hour by 2020 and build more houses – ‘the top priority for capital spending in the next parliament’.

Labour’s biggest hurdle, once presentational issues are forgotten, is reconciling these aims with deficit reduction less clumsily than has so far been the case. These policies will come under deep scrutiny in coming months and there are already small signs of gaps in their thinking.

The pledge to raise the minimum wage to help with living standards is one example. Firstly because it is insincere given that inflation on its current level demands the minimum wage be very similar to eight pounds by 2020 in any case. This was a pledge that will do little to ‘improve’ if barely maintain current living standards in areas with high living costs. Eight pounds is already eighty pence shy of today’s London Living Wage. Mayoral hopeful, David Lammy MP, has already called for London to set its own minimum wage.

Secondly, little has been said about alleviating the negative effects of pushing up the wage. Though the principal underlying the policy is noble, the reality is its rigid application means it can do more harm than good. The Federation of Small Businesses reports that wages remain the single greatest cost to SMEs. A recent survey of their members this year reported 42.6 per cent of firms found rising labour costs were becoming a problem. Rising labour costs were also cited as a knock on effect of rising housing costs for employees and created a growing fear it would lead to employees finding work in cheaper areas.

Miliband did address this in his speech with his promise to build 200,000 new homes, but there are also problems here. Without an iota of government borrowing to fund capital investment, this pledge does not add up. Instead, it seems another breakable promise so often made by Westminster. Housing costs take on average a third of household income– far more if you live in London. In the coming years, many more houses will be needed for the greater number of small households in packed regions.

That is not a problem that can be solved by putting a greater strain on small businesses. Labour needs to offer more details on how to help small businesses, the drivers of growth and jobs (a phrase that once littered the shadow Chancellor’s speeches now seemingly forgotten) to afford better wages and more ideas on how to create affordable housing.

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