Miliband: There was no money left
It's official. There was no money left when Labour left office* but that had absolutely nothing to do with the party spending too much. That, at least, is the clear, unambiguous, unequivocal view of their leader.
Reading Ed Miliband's recent speeches I had assumed that that was the case but I wanted to be sure. So at his news conference this morning I asked Mr Miliband whether the deficit had anything whatsoever to do with the Labour government spending too much. His answer is not a news story as such but it is of huge long-term significance. (Incidentally, I posted earlier on what he had to say about bankers' bonuses.)
Labour's Blairite wing - led by the former PM himself and ably supported by commentators like John Rentoul of the Independent and Phil Collins of the Times - have argued that Labour needs to admit that it did too little to keep spending under control. In his book, A Journey, Blair recalled that he had "an interesting debate, not quite a contretemps" with Gordon Brown during the 2005 election over spending.
"My view was that we had reached the limit of spending. Even with the economy still growing I could sense that enough was enough."
He went on to criticise the way Brown had failed to tackle the deficit:
"If governments don't tackle deficits, the bill is footed by taxpayers, who fear big deficits now mean big taxes in the future, the prospect of which reduces confidence, investment and purchasing power. This then increases the risk of a prolonged slump. In my view, we should have taken a New Labour way out of the economic crisis: kept direct tax rates competitive, had a gradual rise in VAT and other indirect taxes to close the deficit, and used the crisis to push further and faster on reform."
Douglas Alexander has said recently that the party under Gordon Brown appeared to be in denial about the need for cuts - a criticism, admittedly, of presentation rather than policy. However, what links him and the Blairite critics is a political doubt about whether Labour can re-establish its economic credibility without admitting there was a spending problem.
Today Ed Miliband gave his answer. The last government was borrowing at acceptable levels - about 2% of national income - until the financial crisis hit, he said. That crisis and it alone caused the problem. He also pointed out - perfectly fairly - that at that time the Tories said they wanted to match Labour's spending and not cut it.
Labour's leader says the coalition are deceiving people about the past in order to justify mistaken policies for the future. He has taken one very important decision about the future. The party, under his leadership, will not argue that they could offer what Blair called in his book "smaller, more strategic government".
* to quote Liam Byrne, the former chief secretary to the Treasury's letter to his successor.
Update 22:02: Ed Miliband will make clear in the next few days that he agrees with those who say that Gordon Brown appeared to be in denial about the deficit. He will insist, though, that this was a presentational and not a policy failure. He will make clear that this does not justify what he calls the coalition's "deceit" that the deficit was caused by too much government spending.