A month ago, the Chancellor made a mistake.  He made a speech declaring victory on the economy.  He told us the economy was turning the corner and that the Government had won the argument. 

Leave aside for a moment the absence in the speech of any acknowledgement of three lost years of economic growth since the last election.  Leave aside the lack of consideration of whether austerity had contributed to or delayed economic recovery.  The political importance of the speech (and remember this is a very political Chancellor) was that he was declaring victory.

The problem for the Chancellor is that, in doing so, he created an opportunity for Labour.  That opportunity was twofold.  First, by declaring victory the Chancellor and the Prime Minister have proven themselves out of touch.  Yes there have been a series of encouraging signals for the economy.  But outside those benefiting from London property prices it doesn’t feel like a recovery in most of the country.  Certainly in places like Wolverhampton where 1,000 local authority job losses have just been announced, Ministers getting out the bunting look like they are living on a different planet. 

But the second opportunity, related to the first, is that declaring victory allowed Labour to redefine the exam question in the run up to the election.  It is an opportunity Ed Miliband tried to seize at the Labour conference.  Instead of asking who was best for making cuts as the Tories want the question to be, he asked a different question -; what kind of recovery are we going to have?  Who is going to benefit?  What do we do for those feeling the squeeze of declining real living standards and rising bills? 

Fast forward a week to the Tory Party conference and listen to the sound of brakes screeching.  Hang on, said the Chancellor in his conference speech. There is a long way to go.  Recovery isn’t certain.  In fact to make it certain we need more cuts.  Here is a new fiscal rule I am setting (but since his last one collapsed in tatters who will pay much attention to this one).  The Tory conference was an attempt to answer the Labour conference by dragging the question back to austerity and cuts. 

This battle will go a long way to deciding the next election but one of the most common mistakes in fighting elections is to fight them through the rear view mirror.  Elections are always about the future, not about an economic argument a few years ago.  And when it comes to 2015 people will be asking, what comes next and who is best to shape it?  Perhaps, as Parliament returns, Ed Miliband should take a moment out to send the Chancellor a thank you card for allowing him to move the argument on from austerity and cuts.  After all, the opportunity was created by that speech a month ago declaring victory on the economy.

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