Sept. 28 (Bloomberg) -- Ed Miliband, the leader of the U.K.’s opposition Labour Party, said that if he wins the next election, due in 2015, he will not be able to reverse all the spending cuts made by Prime Minister David Cameron’s government.
Speaking as the coalition of Conservatives and Liberal Democrats prepares to set out plans to reduce public spending on Oct. 20, Miliband said he could not guarantee he would go back on its decisions and pledged to be “serious” about tackling the record budget deficit.
“Come the next election there will be some things they have done that I want to reverse but won’t be able to,” Miliband told his party’s annual conference today in Manchester, northwest England in his first keynote speech since being elected leader three days ago. “I say this because the fiscal credibility we earned before 1997 was hard won and we must win it back by the time of the next general election.”
In a speech designed to distance himself from the mistakes that led Labour to electoral defeat in May after 13 years in power, Miliband challenged the economic orthodoxy that caused the worst financial crisis in more than 60 years. He said the Labour governments of former Prime Ministers Gordon Brown and Tony Blair didn’t do enough to control mounting personal debt, regulate banks and secure jobs.
Labour and the Conservatives clashed before May’s election about how to tackle the deficit. While Labour Chancellor of the Exchequer Alistair Darling promised to cut the budget deficit in half from 11 percent of gross domestic product by April 2014, the coalition now aims to narrow the shortfall by two thirds over same four-year period by implementing the deepest spending reductions since World War II.
“The starting point for a responsible plan is to halve the deficit over four years, but growth is our priority and we must remain vigilant against a downturn,” Miliband said, without being specific about how quickly or deeply he would cut.
“He is trying to move on from Alistair Darling, but we are going to need more detail,” said Labour lawmaker Diane Abbott, one of four defeated leadership candidates. Cameron said in August the cuts won’t be reversed once the economy recovers.
Miliband said high pay for bankers raises questions about the nation’s values, pledging a more stringent bank levy to allow higher spending on public services.
“What does it say about the values of our society, what have we become, that a banker can earn in a day what the care worker can earn in a year?” Miliband said, repeating a call for a “living wage” for low-paid workers of 7 pounds ($11) an hour.
“Responsibility in this country shouldn’t just be about what you can get away with,” Miliband said. “And that applies to every chief executive of every major company in this country.”
“It is early days, but we detect a drift away from New Labour’s efforts to talk up a pro-enterprise agenda,” Graeme Leach, chief economist at the Institute of Directors, said in an e-mailed statement.
Miliband said the Labour Party’s acceptance of low taxation and light regulation of financial institutions had been misguided and that Brown was wrong to argue that his policies could end the economic cycle of “boom and bust.”
The 40-year-old former energy secretary was an adviser in the Treasury under Brown, who presided over the longest unbroken economic expansion on record during his decade as chancellor. Arguing that growth had been underpinned by the 1997 decision to give the Bank of England control over interest rates and by his own rules to constrain government borrowing, Brown said repeatedly Labour had put an end to “boom and bust.”
Within months of becoming prime minister in 2007, though, Brown was forced to nationalize banks as the financial crisis swept the globe. As spending to shore up the banks and stimulate the economy increased, Britain’s budget deficit swelled to the highest among Group of 20 countries.
“I am of a different and new generation,” Miliband said, aiming to draw a line under the Blair-Brown era. “There is a big defining difference between us and David Cameron and that is optimism.”
A poll published today by YouGov Plc for The Sun newspaper put Labour ahead of the Conservatives for the first time since 2007. The survey put Cameron’s Tories at 39 percent, Labour at 40 percent and the junior coalition partner, the Liberal Democrats, at 12 percent. The company interviewed 1,948 voters Sept. 26 and yesterday; no margin of error was given.
Miliband, who owed his leadership victory to the support of union members, warned that organized labor should not seek to disrupt the country over the spending cuts. “I have no truck with irresponsible strikes,” he said.
“The responsibility for strikes lies not on the shoulders of our hard-working members but the government,” Mark Serwotka, general secretary of the Public and Commercial Services Union, said in an e-mailed statement. “The real militants are in the Cabinet as they are driving through irresponsible and unnecessary spending cuts.”
Miliband paid tribute at the start of his speech to the “graciousness” of his elder brother David, whom he beat to lead the party. David has to yet to announce whether he will join his brother’s team of opposition spokesmen.
“It was a really strong speech, a very good speech, the speech of a conviction politician,” David told reporters in Manchester. “I thought he delievered it very well.”
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