Why is Miliband fixating on the NHS when he’d be better off focusing on the wealth gap?

Inequality is the story to tell, and it can win Labour the election

Labour leader Ed Miliband delivers a speech on his party's plans for the NHS, in Sale, on Tuesday (PA)

Making the National Health Service the main thrust of Labour’s election is a mistake. I will describe below a much better alternative. Admittedly the NHS came ahead of the economy, immigration, welfare and jobs in a recent poll of what people think are the most important issues, but nonetheless this strategic decision carries with it many perils.

Public satisfaction with the NHS is high. The British Social Attitudes survey shows that until 2004, satisfaction fluctuated between 34 per cent and 46 per cent of people questioned. But from then onwards, overall satisfaction rose steadily to an all-time high of 70 per cent in 2010. For the past three years, satisfaction has remained unchanged statistically, sitting at 60 per cent in both 2012 and 2013. Given the steady flow of alarming stories of NHS deficiencies, this is remarkable.

Ed Miliband, the Labour leader, made a speech on Tuesday that warned, “We only have 100 days to save the NHS as we know it.” He went on to make a series of promises. “Invest in staff so the NHS has time to care”. Yes, very nice, but will Labour find that it can afford this?

“Help end 15-minute care slots through new year-of-care budgets”. Again good, though I don’t myself know what a year-of-care budget is. More seriously, will local authorities be given the resources to do this? And then, carried away by the majesty of these pledges,. Miliband went so far as to promise that Labour would incentivise “providers to improve social care and prevent vulnerable patients falling ill or injuring themselves.” Does anybody read this stuff before it goes on to the autocue?

Seeking to rally voters with the cry that there are only so many days to save something or other has an unfortunate precedent. When William Hague led the Conservative Party in the 2001 election, he gave a speech saying that there were only twelve days remaining to save the pound. “Twelve days to secure our independence. Twelve days to decide whether our children and grandchildren will inherit the same freedoms that we inherited in our turn.” He was referring to the risk that a Labour government would join the euro. In the event, the Conservatives made a net gain of one seat and trailed far behind Labour. Hague immediately resigned as leader.

Alan Milburn, the former Labour Health secretary was right when he said this week that in focusing on the NHS, the party was retreating to its comfort zone. But what other strategies are available to Labour?

In the Financial Times yesterday, Milburn and John Hutton, observed that “general elections are fought and won on the issue of the economy”. They are puzzled that Miliband has been hesitant to rebut the Conservative charge that the last Labour government wrecked the economy by letting the public finances spiral out of control. Still, I wouldn’t go there. Nor is immigration an easy terrain for Labour.

What is left, though, is a highly important area of public policy that is authentically “Labour” and which the Tories dare not touch - the widening gap between the haves and the have-nots. Making this the driving force of the Labour campaign would have many advantages. To begin with, it is well supplied with shocking statistics.

In Kensington and Chelsea, in the wealthiest part of London, a man can expect to live to 88 years, while a few miles away in Tottenham Green, one of the capital’s poorer districts, male life expectancy is 71 years. Or, to take another example - the chief executive of a big company takes home more pay in three days than an average worker gets in a year.

Second, and this is what turns reversing inequality into a winning strategy, reducing the gap between the haves and the have-nots in Britain, where the disparity is unusually wide, would bring significant economic advantage. This finding of enormous consequence is rarely discussed, yet in the past year, two organisations of great respectability have made the claim.

The first is the International Monetary Fund. In February 2014 it published a note entitled “Redistribution, Inequality and Growth”. It argued that “lower net inequality is robustly correlated with faster and more durable growth”. The second is the OECD, an organisation to promote good economic and social policies and whose members include many of the world’s most advanced countries. In a study published last December it stated that inequality has a negative impact on economic growth.

The OECD added that the impact turns out to be sizeable. In the United States, the United Kingdom, Sweden, Finland and Norway, the growth rate would have been more than one fifth higher, according to OECD calculations, were it not for the fact that the disparities between the haves and the less-well-off actually widened. One fifth higher! That extra growth would create a lot of employment, wealth and better public services.

President Obama has noticed. In his recent keynote speech on inequality he referred to “one study that finds that growth is more fragile and recessions are more frequent in countries with greater inequality”. The President sketched out the history of the trend to greater inequality. There are many factors but one that he chose to emphasise was this: “As values of community broke down, and competitive pressure increased, businesses lobbied Washington to weaken unions and the value of the minimum wage. As a trickle-down ideology became more prominent, taxes were slashed for the wealthiest, while investments in things that make us all richer, like schools and infrastructure, were allowed to wither”. So there is a story to tell, which is a further advantage in a general election.

“Trickle-down ideology” is the important phrase here. This belief relies upon the powerful analogy of watering plants so that when the precious liquid trickles down below the surface, it refreshes the roots below. Likewise it was absurdly claimed - and still is - that when the wealthy buy large houses, drive fast cars and eat in expensive restaurants, their spending somehow trickles down to the rest of us. Well, it doesn’t.

Instead what Labour needs to promote is a “trickle up” philosophy. Just as a spring pushes water up to the surface where it irrigates valuable crops, so raising the standard of living of the have-nots, by providing better public services in the less favoured parts of the country as well as targeted tax measures, would be good for everyone. Economic growth would rise and a feeling of shared opportunities as well as shared sacrifices would return. It would be a happier Britain than the hard-faced Tories are able to conceive.