Mandelson’s second state of the race update

By Alex Smith

Peter Mandelson has sent his second “state of the race” memo to Labour supporters, which can be read in full below. His first update earlier in the week can be read here.

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The Tories say they have changed. But this week provided yet another example of how they haven’t.

In 2001 and 2005 the Tories spent the first week of their campaign proposing unfunded tax cuts – capturing headlines in the process. In the weeks following, they saw the basis of their plans for the economy unravel, and the risk they posed to the economy exposed.

In 2010 the Tories have decided to repeat the same trick but are hoping this time for a different outcome. They claim they are making the running, when actually they are making it up as they go along.

Once again, the Tories are confusing publicity with credibility.

In doing so, they are muddying their message. Deficit reduction was apparently their No.1 priority before the election started.

Now they have ditched their tough message and chosen instead to go for the ‘soft’ option of an unfunded tax giveaway at a cost of £30 billion – in addition to all the other unfunded tax promises they have made.

They will now struggle to claim that they will cut the deficit further, while arguing that they will maintain spending on public services, and find the money for the tax cuts. This three card Tory con trick – cutting the deficit further, sustaining spending and unfunded tax cuts – is all starting to look very hollow.

People in the country know you don’t get something for nothing. Common sense will tell them if you are being offered something that is too good to be true, it is, indeed, too good to be true.

The Tories’ economic plans are a slow burning fuse under their campaign

As in 2001 and 2005, the incoherence of Tory tax and spending plans is the slow burning fuse under the Tory campaign, and we do not need to rush our fences in detonating it.

This week, we started to put Tory spending plans under scrutiny.

We challenged the Tories to set out how they would pay for the £30 billion commitment to cancel next year’s NICs increase.

They want to keep it quiet until the emergency Budget George Osborne wants to give in June.

But pressure is mounting on the Tories’ spending plans. Martin Read, their own adviser, has been clear that the Tories do have secret plans for how they’d go about cutting spending – they just won’t publish them.

In the meantime, George Osborne says it will all be paid for out of “efficiencies”. Cameron contradicted him, admitting that cuts in core public spending would have to be made, only for Osborne to repeat his line a few hours later.

So it is our task to expose what the Tories wish to conceal and the risk they pose to recovery and to services. And, as in 2001 and 2005, we have the time to do it. We are only four days into a four week campaign.

The Tories’ risk to economic recovery

This week saw more encouraging signs of how we have embarked on the road to recovery.

Independent figures this week showed manufacturing bouncing back strongly in February with output rising 1.3% on the month in February, almost twice as fast as economists’ 0.7% forecasts and its fastest pace for five months.

Car figures this week showed a much better than anticipated first quarter in 2010 – with car registrations up by 26.6% from this time last year – helped by the scrappage scheme. Land Rover announced its UK sales in March saw their monthly sales at an all-time record in their home market. My good friend, Marks and Spencer boss Stuart Rose, also announced strong growth in UK sales in the first quarter of 2010.

And the OECD predicted this week that the UK economy will grow at the second fastest rate of the G7 major economies for the second quarter of this year.

But the OECD also stressed that the recovery remains fragile and that policy support should not be removed too fast.

Yet this is exactly what the Tories are proposing to do. Not planning a sensible exit for the stimulus, but a rush for the exits.

Their plan to take billions out of the economy straight away would choke off recovery before it is secured.

Just as they got the big judgements wrong on the recession they are now getting the big judgements wrong on the recovery.

And it is the British people who would pay the price in lost jobs, lower living standards, and cuts to their services.

Not a time for business as usual

As the Parliament drew to a close this week the Tories showed their true colours on some important issues. They talk of change when the camera is on and block it when the camera is off: on one-to-one school tuition for children; on the use of DNA evidence to catch murderers and rapists; on voting reform; and on getting rid of the hereditary principle in the House of Lords.

Next week [Monday] we will launch our manifesto that will set out our plans to address the main future challenges we face in our economy, our society and our politics:

Rebuilding our economy means securing the recovery and investing in future growth and jobs, for the many not just the wealthy few;

Renewing our society means further strengthening the communities that bind our country together, and continuing improvement in our public services;

Restoring trust in politics means greater transparency and accountability in a system battered by the expenses scandal.

We believe our programme for further national renewal meets the big challenges facing Britain with proposals that are ambitious but affordable, and which learn from what Labour has done well and the lessons we take from our experience to date.

It is a manifesto to further our goal of a modern, progressive Britain, based on the values of fairness, respect, decency and openness. And one thing is also clear: this is not a time for a business-as-usual manifesto. The work we have to do is too big for anyone to be complacent – or to put confidence in novices.

Thanks again for all you are doing. Keep up all your hard work. There is still some way to go but as we have shown in election campaigns before, victory comes to those with the best ideas and toughest resolve.

Thank you,

Peter