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Miliband warning on middle classes


Ed Miliband will put the "cost of living crisis" at the heart of his platform for a future Labour government

Ed Miliband will put the "cost of living crisis" at the heart of his platform for a future Labour government

Ed Miliband will put the "cost of living crisis" at the heart of his platform for a future Labour government

The link between growth and ordinary families' finances has been "broken", as the proceeds of economic recovery disproportionately go to the rich and the rising cost of essentials hits middle-income earners hard, Labour leader Ed Miliband has warned.

Mr Miliband promised to put the "cost of living crisis" at the heart of his platform for a Labour government after next year's general election, describing it as "the greatest challenge of our age" and warning that without a fundamental shift in government policy it will continue for the next five years.

The Labour leader has come under pressure from some within the party to tone down his cost-of-living message amid expectations that wage growth may at last outstrip inflation this year.

But, in an article for The Independent, he highlighted figures from the Office for Budget Responsibility which predict that real earnings will increase at only half the level of GDP growth in 2015 and will continue to lag behind at least until 2018 - breaking the pattern of decades before the 1990s which saw middle-class living standards improving in line with the economy as a whole.

Mr Miliband dismissed Chancellor George Osborne's declaration that the Government's goal is full employment, pointing out that for many people work is no longer enough to lift them out of poverty and guarantee their families a better future.

The Labour leader wrote: "Millions of families are caught in the crosshairs of a cost-of-living crisis: a few people at the top scoop more and more of the rewards; markets such as energy have become uncompetitive, allowing huge prices to be imposed on consumers; and many of the new jobs being created require fewer skills, pay lower wages and offer less security.

"This Government cannot deal with these problems because lying beneath its claims of being converted to full employment is an economic ideology built on low pay, low skills, low prospects and low productivity.

"We can and must do better than this. Labour knows that if Britain stays in this race to the bottom, the cost-of-living crisis will continue - unaddressed and unsolved - for the five years of the next Parliament too.

"Wages for most people will continue to lag far behind the wealth being created and middle-income families will still be locked out of the benefits of growth."

Mr Miliband said the OBR figures did not reflect the full scale of the difficulties facing middle-income families, as costs which hit ordinary families hardest, such as housing, are not included in the statistics.

"Any gains middle-income Britain gets as the economy picks up will be nothing compared with the scale of the crisis that remains or the assault on family finances of recent years," he said.

"When ministers claim the cost-of-living crisis is over, it serves only to demonstrate they understand neither the reality faced by millions of hard-working people nor the scale of the generational challenge.

"The middle class, once the solid centre of our economy, is being hollowed out with growing insecurity and the prospect, for the first time since the war, that their children will be worse off than they were."

While getting people into work was "absolutely necessary", it was "no longer enough", said the Labour leader, who said it was also vital to "have more decent jobs and rebuild the middle class".

He promised: "Labour will ensure all the wealth creators are rewarded in our economy by making work pay while balancing the books in a fairer way during the next Parliament.

"We will take on the vested interests that hold businesses and families in our country back. And we will create the conditions for the high-wage, high-skill economy that tackles Britain's productivity gap, helps businesses succeed and allows people to fulfil their potential."

Mr Miliband said: "There is now a clear divide emerging ahead of the election: on one side, the Conservative Party boasting how it has solved the cost-of-living crisis; and, on the other side, the vast majority of the British people who know that it has not."

But Conservative chairman Grant Shapps said Mr Miliband was talking about a problem "created by the Labour government".

He said: "L abour's Great Recession made people who work hard poorer, and their unbalanced economy saw just one job created in the North and Midlands for every 10 created in the South.

"Our long-term economic plan to secure a better for the whole of Britain is about creating jobs in every part of our country - meaning more people having the security of a regular pay packet. That's the only way to raise living standards for everyone.

"But Ed Miliband has no plan. All he offers is short-term quick fixes, and more spending, more borrowing and more taxes. That's exactly what got us into a mess in the first place, and hardworking people will pay the price with a less secure future."