Miliband and Balls Yet to Earn Voters' Trust on The Economy, says Mandelson

Labour's leadership still need to convince voters that they can be trusted on the economy before they can capitalise on the government's weaknesses and win a general election, Lord Mandelson has suggested.

Labour has been comfortably ahead in the polls for most of the past two years, and polled 40% to the Conservatives 32% in the latest ICM poll for the Guardian two days before Christmas. However, when it comes to the two parties' economic policies, ratings for Labour leader Ed Miliband and shadow chancellor Ed Balls still lag behind.

In what could be seen as a slight undermining of the position of Miliband and Balls, Mandelson said it was by no means certain the party would fully benefit from any public mood swing if the economy recovers. Such a scenario could "vindicate" the coalition government's austerity programme and put Labour "sharply on to the back foot", said Mandelson in an article for the Financial Times on Wednesday.

Alternatively, however, it could persuade the public to "forget and forgive Labour's alleged past economic mistakes", especially if sentiment turns against the harsh cuts to welfare benefits and the NHS, he suggested.

"Nonetheless, voters would still need to have confidence in the two Eds' economic responsibility," added Mandelson, once a close ally of former Labour prime minister Tony Blair. "Lowering trust in Labour's fiscal credentials remains the Tories' main aim. Removing this target will be Labour's chief objective in 2013."

Writing about the UK political scene in the year ahead, Mandelson echoed many commentators in predicting that "the fate of the coalition continues to hang on the economy".

If there is not noticeable growth, Mandelson suggested that rumours last summer that the chancellor George Osborne would swap jobs with foreign secretary William Hague "could become reality" – a move that would make David Cameron's position more vulnerable because the prime minister and Osborne "succeed or hang together", said Mandelson.

There could also be more pressure within the Liberal Democrats for their leader, deputy prime minister Nick Clegg, to be replaced by Vince Cable, the more Labour-leaning business secretary.

Writing in Wednesday's Times, Clegg challenged Labour to produce figures to prove they could pay for increases in welfare payments, after the opposition said it would oppose a cap on benefits announced in the autumn statement in December.

"That means they believe welfare claimants should see a bigger rise than the 1% that public sector workers will get on their wages – which they [Labour] support," wrote Clegg. "So Labour must show how they'd pay for it. Would they cut hospital budgets? Schools? Defence?"

In the continuing tussle for economic credibility, Labour this week highlighted that the government is to miss a deficit reduction target set in law by the previous Labour government and criticised at the time by Osborne as not being rigorous enough. After Labour committed in April 2010 to halve the deficit in this parliament, Osborne committed the coalition to eliminating the structural deficit by 2016.

Powered by article was written by Juliette Jowit, political correspondent, for on Wednesday 2nd January 2013 16.41 Europe/London © Guardian News and Media Limited 2010


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