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Blair Warns Miliband Labour Risks Becoming Protest Party

April 11 (Bloomberg) -- Former U.K. Prime Minister Tony Blair, who won three general elections for Labour, warned its current leader that resistance to austerity and welfare cuts risks reducing it to a party of protest.

Blair told Ed Miliband that the political center has not shifted in his party’s favor since the financial crisis of 2008, highlighting the danger of returning to the dividing lines of the 1980s, when Labour championed the status quo and was unable to oust Margaret Thatcher’s Conservatives.

In an article in the Labour-supporting New Statesman magazine published today, Blair rejected the argument that his party created the financial crisis, saying the U.K.’s structural budget deficit had been below 1 percent of gross domestic product in the financial year that started in April 2007. However the crisis occurred, Blair argued, “no one can get permission to govern unless they deal with its reality.”

“The paradox of the financial crisis is that, despite being widely held to have been caused by under-regulated markets, it has not brought a decisive shift to the left,” Blair wrote. “But what might happen is that the left believes such a shift has occurred and behaves accordingly.”

“The risk, which is highly visible here in Britain, is that the country returns to a familiar left/right battle,” Blair wrote. “The familiarity is because such a contest dominated the 20th century. The risk is because in the 21st century such a contest debilitates rather than advances the nation. This is at present crystallizing around debates over austerity, welfare, immigration and Europe.”

‘Own Way’

“I am leading in my own way,” Miliband told the BBC today. “Political parties have to move forward, not backward, not going back to old solutions, but need to adapt to new times.”

Blair said Prime Minister David Cameron’s Tories, cutting welfare benefits and public spending to narrow the deficit, are a party “clothing itself in the mantle of fiscal responsibility, buttressed by moves against ‘benefit scroungers,’ immigrants squeezing out British workers and -- of course -- Labour profligacy.”

Cameron took up the theme in an interview today with Sky News.“One pound in every three spent by the government is on welfare,” he said. “Welfare shouldn’t be a lifestyle choice.”

Blair wrote that Labour, on the other hand, “is back as the party opposing ‘Tory cuts,’ highlighting the cruel consequences of the Conservative policies on welfare and representing the disadvantaged and vulnerable.”

“Tony Blair is right to warn that Labour aren’t a credible party of government under Ed Miliband,” Conservative Chairman Grant Shapps said in an e-mail today. Miliband and his Treasury spokesman, Ed Balls, “have opposed every single difficult decision this government has taken to fix the problems that Labour left behind -- on welfare, on immigration and on the deficit.”

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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