Own Living Standards

As Stewart Wood does:

Two weeks ago, Ed Miliband announced that an incoming Labour government will freeze energy prices for 20 months, until a reformed energy market can be put in place at the start of 2017. Ever since, we have been treated to the sight of Tory message-panic as they search for a response. They're still searching.

First they said that a temporary freeze on energy prices was a Marxist conspiracy. Energy minister Greg Barker called it catastrophic, Grant Shapps said it threatened Britain's security. But Michael Gove said that kind of talk was overblown and should be "taken with a pinch of salt". David Cameron calls the price freeze a con. But wait a minute – last week he said it "struck a chord". It all adds up to the political equivalent of Looney Tunes' Tasmanian Devil, a frenzied whirl of contradictory arguments thrown up in the air by fulminating ministers.

What's interesting about this spectacle is not just the Conservative party's failure to find an argument that at least two of its MPs can repeat on consecutive days. Much more interesting is what this failure reveals about the Tories' view of the economic problems Britain faces, and of the strategic challenge they face, in the run-in to the next election.

The first lesson is that there is complete intellectual confusion in the Cameron-Osborne team about what they think about the relationship between government and markets. The Tories cannot tell us what they are prepared to do to sort out markets that patently do not work for businesses or consumers.

It is not only ridiculous to say that committing to fixing broken markets is Marxist, it is also ignores the economic tradition Conservatives claim to uphold – those most passionate about the virtues of the market economy have recognised that reform is needed to ensure competition works in the public interest.

And when the Conservatives attack price regulation in the same breath as introducing a too-little too-late effort at keeping rail fares down, it's time to give up the search for intellectual coherence altogether.

Second, the strategy behind the Tory attack on Labour has backfired. Cameron wanted to portray Miliband as on the leftwing margins of British political opinion. The problem is, it turns out that two-thirds of Britain supports Miliband's pledge. Tory high command can insist all they like that challenging large companies who raise prices in good as well as bad times is evidence of "extremism", but the British public just doesn't buy it.

The only people who buy the caricature of Labour that Tory ministers peddle is the hardcore of their own party's base. And therein lies the strategic backfiring of Cameron and Osborne's response. In their silly desperation to paint Labour as a bunch of commies, they find themselves talking to a small section of their core electorate, while Labour speaks for the broad majority of the British public. Lynton Crosby must be choking on his clients' tobacco leaves.

But most interesting of all is a third lesson about the Tories' view of the role of the economy in the next general election. The Conservatives' election strategy is to attack any attempt to put the cost-of-living crisis at the centre of political debate. Cameron and Osborne will strain every sinew in the next 18 months to insist that the fact that Britain is, at last, emerging from the slowest recovery in 300 years means you should vote Tory.

The big problem with this strategy is that it's out of step with the public's perceptions of their own living standards. None of us feel the economy in aggregate statistics. The Tories' chaotic response to Labour's proposal on energy prices has revealed a blindspot about a fundamental problem with our economy: that the connection between growth and family incomes has snapped, and needs to be restored.

Cameron's problem is not just that he doesn't understand how much the cost of living crisis is biting with Britain's families; nor that he doesn't believe in government taking urgent action to do something about it. It is that he is wedded to a political strategy that relies on pointing people towards GDP graphs produced by the Treasury, and telling voters that their life experience shouldn't affect how they vote.

I wish him luck with that one.