Ed Miliband's big plan is anti-big business, not anti-business. Now he must convince the electorate

Some Labour figures worry that the party leader is overdoing the anti-business rhetoric

Labour leader Ed Miliband during a Q&A session at the Standard Life building in Edinburgh, Thursday 7 November (PA)

Slowly but surely, Ed Miliband is answering the $64,000 question: what is the point of a left-of-centre government when there is no cash to splash on public services in the age of austerity?

Michael Heseltine once promised to “intervene before breakfast, before lunch, before tea and before dinner” to boost British business. It is now clear Mr Miliband is ready to intervene 24/7 to create a “new economy” that delivers social justice by a different route through tighter regulation, without spending extra billions.

Business leaders do not like it, but cannot say they were not warned. In 2011, Mr Miliband promised us “responsible capitalism”, that he would back the “producers” and target the “predators” as he took on “vested interests”. His talk of transforming the economy was widely derided at the time. But his big new year speech yesterday showed that he has not changed his original strategy at all. Love him or loathe him, he is sticking to his own Plan A and will not be diverted from it – whatever the criticism from his opponents, the media or from inside Labour.

Mr Miliband insisted yesterday that he is not “anti-business”. But he is open to the charge of being “anti-big business.” For him, small is beautiful: after promising to break up the Big Six energy companies, he moved on yesterday to target the Big Five banks. He pledged to create at least two new banks and that his sweeping reforms would ensure the banks served small firms, rather than the other way round. Note: neither his proposed energy price freeze or banks shake-up would cost a penny of public money.

Some Labour figures worry that Mr Miliband is overdoing the anti-business rhetoric. After all, they point out, millions of voters work for big companies. And those employed by small firms know they depend on big companies for contracts.

Similarly, some Labour MPs worry that bashing the banks and energy firms and posing as the consumers’ champion will only get Labour so far. “We’re a political party, not the BBC’s Watchdog programme,” one snarled. Although the proposed energy prize freeze spooked the Conservatives and boosted Mr Miliband’s personal ratings, Labour’s opinion poll lead has fallen since then. One explanation is that, while people welcome Labour’s emphasis on living standards, they do not yet trust the party to do much to improve them. “Talking about the cost of living is not a strategy for government,” said one Labour MP.

Even some Shadow Cabinet figures fret privately that Mr Miliband is indulging in “displacement activity” that allows Labour to put off the really difficult questions, to which yesterday’s speech offered no answers: how and when would a Labour Government eliminate the deficit; how much more than the Conservatives would Labour spend on building projects like housing; how Labour would secure the recovery and create jobs?

The Miliband critics worry that, when he wrote his Plan A, he set too much store on public anger about the cuts helping Labour to victory, believing the party’s opposition to them would be rewarded. While Labour accuses the Coalition of having “three wasted years” while the cuts strangled growth, that argument will be redundant in most voters’ minds by next year’s general election. Some Blairites wonder whether it was Labour who wasted three years, by not saying much about the deficit and building credibility. “We are still avoiding the tough questions,” a Labour frontbencher admitted.

The fears of the Labour anxious brigade will not be allayed by a revealing comment from Mr Miliband when he answered questions after yesterday’s speech. He argued that, while the deficit was important, there is “a yearning in the country” for politicians to understand that the problems in people’s daily lives “matter just as much.” He added: “The cost of living crisis is a massive issue for people and I think what people want is a vision for the way this country succeeds.” The Tories, he claimed, were “impoverished” in their vision.

This goes to the very heart of next year’s election battle. The Conservatives want to focus on the deficit because they know Labour is not trusted to “finish the job.” But they know Mr Miliband is on to something with his “cost of living” campaign. This explains George Osborne’s ruthlessly-timed spoiler on the eve of the Miliband speech, in which he backed an inflation-plus rise in the national minimum wage. It was a chilling reminder to Labour of the tough fight ahead – and that the Government can still “do” while Labour can only “say”.

Conversely, Labour would rather talk about living standards but insists that tackling this problem and the deficit are not mutually exclusive. “We will show credibility and how we will make a difference,” one Miliband aide insisted.

Mr Miliband was right about one thing yesterday: the “two competing visions” for the country are becoming clearer. And yet, in the way the Chancellor joined battle on Labour’s favoured ground on living standards, it is now time for Labour to play hard on the Tories’ turf and tell us how it would reduce the deficit.