Son of Brownies
Peter Hoskin 7:11pm
How generous of Ed Balls to publish a transcript of his interview on the Politics Show earlier, so that we can amble through it on a Sunday evening. It contains, as you'd expect, more
disagreeable parts than agreeable, and nothing more so than his comments about the national debt, deficit and all that. Two of his arguments, in particular, are worth alighting on because they're
Brownies in the classic mould, and will probably be served up again and again:
1) ‘After the Second World War we took a number of years to repay our much higher level of debt. The government and Vince Cable have tried to get this done in one Parliament and it is backfiring.’ Here, Balls is right on two counts: measured as a percentage of GDP, we did have a much higher level of debt in 1945, and it did take decades to repay. But, beyond that, the rest of his point is utterly misleading. Why? Because today's government isn't doing what any normal person would understand as ‘repaying’ the national debt over one Parliament. On current figures — whether it's real terms, cash terms or as a percentage of GDP — debt will be higher in 2015-16 than it is today. In fact, the IFS reckons that it will still take a couple of decades for us to return to pre-crash levels of around 40 per cent of GDP.
If anything, the country's debt profile is fairly similar now to how it was after the second world war, putting aside the clear difference in scale. As a percentage of GDP, debt started falling from its post-WW2 peak around three years after the end of the conflict. Now, debt is forecast to start falling from a peak of 70.9 per in 2013-14 — around, erm, three years into this Parliament. If Balls wanted to make George Osborne seem like a radical nutjob in comparison to our postwar politicians, then he might have picked a more convincing example.
2) ‘[The government's approach is] leading to higher borrowing as well as flatlining growth.’ Okay, Balls can have the flatlining growth, not least because it provokes him into those ‘increasingly maniacal gesticulations’ at PMQs. But higher borrowing? According to the Office for Budget Responsibility, borrowing will fall every year of this Parliament, however it's measured. For instance, as a percentage of GDP, public sector net borrowing is forecast to stand at 1.5 per cent in 2015-16, compared to 9.9 per cent last year.
What Balls actually means — although, for some reason, he now prefers to use the shorthand ‘higher borrowing’ — is that the government's borrowing forecasts have gone up from those made last year, even though borrowing is going down overall. Being specific about it, the government is expecting to borrow about £46 billion more over this Parliament than it anticipated last year, largely due to slower growth. But, like I say, borrowing will still be going down overall.
It's a shame that Balls is trying to make this subtler point stand for something else — because it's concerning enough in the first place. If growth keeps on slumping, then it is going to be more and more
difficult for the government to keep the public finances from swelling out of shape. That could, in theory, result in genuinely higher borrowing in future. But not yet — whatever Balls
says.
UPDATE: And Ed Balls replies on Twitter...
Previous
Dimoto
November 13th, 2011 7:31pm Report this commentThis blog-post is about two weeks too early - let's see the current estimates.
In other news, Balls likes to conflate "debt" and "deficit".
Who woudda thunk it ?
annassasin
November 13th, 2011 7:37pm Report this commentI missed the program, but no doubt Balls was corrected by the BBC presenter ???
You can say one thing about Balls, he continues to insist on Armageddon, and he is going to get what he wishes for.
tinyurl.com/d8ag944 will explain
toco
November 13th, 2011 7:54pm Report this commentGiven Ed and Yvette Cooper Balls' joint responsibility for creating financial chaos in the UK together with the hapless Gordon Brown I suspect the odious one is speaking to his mirror.The two of them being ex journalists really should have discovered misleading propositions rarely succeed.
pregethwr
November 13th, 2011 7:58pm Report this comment"According to the Office for Budget Responsibility, borrowing will fall every year of this Parliament, however it's measured."
I think here he is taking a punt on what the revised figures at the end of the month will say... he may well be right...
HJ
November 13th, 2011 8:02pm Report this commentAll Balls is doing is inventing another take on the Labour dishonest message that "you don't pay off the credit card in one go".
Of course, what the government is doing is in no way equivalent to paying off a credit card - it is merely trying to slow (and eventually eliminate) the rate of new credit card borrowing - a quite different thing from paying back credit card debt.
And, as everyone surely knows by now, you can feel a little richer for a while by just borrowing more on your credit card, but the more you keep doing it, the worse the eventual reckoning. Everybody except Balls, that is.
Magnolia
November 13th, 2011 8:26pm Report this commentWe caught Mr Clegg doing this sort of thing the week before last.
The politician uses one line of argument or debate to make a supposed point about something that sounds similar and relevant but is in fact a completely different entity entirely.
Borrowing may have gone up but may still be going down overall as you say, but why didn't he point out that spending is going up?
Could that be something to do with conflicting with his narrative of excessive cuts? The real versus phoney cuts is another lot of word play.
When it comes to sums only Fraser's charts will do.
We had more of this sort of 'careful comment' from Mr Hammond over the sacking of injured troops memo. Injured soldiers will not be eligible for redundancy when they are receiving active medical treatment.
So that's all right then.
What about the legless soldier whose stumps are clean and nicely healed such that his doctors say well we've finished old chap but you've got to get on and live the rest of your life like this so over to you. Will he then qualify for the sack? Shall we ask Mr Hammond?
The Dear Leader also goes out of his way to tell us that not a penny more will go on Euro bailouts (Times front page) but boosting the IMF, which might bail out a Euro country, well that's a different thing isn't it?!
The big one's coming when 'they' tell us that the referendem lock isn't needed for massive treaty change in the Eurozone because it doesn't involve us.
There's only so much a simple person can take.
Tim Worstall
November 13th, 2011 8:48pm Report this comment"Here, Balls is right on two counts: measured as a percentage of GDP, we did have a much higher level of debt in 1945,"
Why, yes, yes, we did. And we ran budget surpluses for a couple of years to try and pay for it too.
Ed P
November 13th, 2011 9:14pm Report this commentIf Labour wish to be a credible political force again (after they've ditched the electorally-poisonous speak-your-weight machine RedEd), they need an economic spokesperson that's believable. Balls is not, and can never again be, that man. His "previous" cannot be forgotten. He's tainted by association with G. Brown and their economically-suicidal policies. Just go away - we need a viable opposition, not these jokers.
BrianSJ
November 13th, 2011 9:55pm Report this commentSo the effect of a Labour government is equivalent to a world war. From their own mouths.
lola
November 13th, 2011 10:36pm Report this commentBalls is bizarre. From 1939 to 1945 we were involved in total war. All the UK's efforts, and treasure and blood, were directed in defeating (ironically) National Socialism. There is absolutely no credible comparison between that necessity and the equivalent volume of debt racked up by New Liebour from 1999 to 2010, ultimately for no puprose other than the creation of a 'client state. That was sheer unadulterated profligacy.
NL governed by deceit. Balls is continuing that tradition.
startledcod
November 14th, 2011 12:09am Report this commentOne thing that would make it harder for politicians to be duplicitous about debt/deficit and also to make it easier for joe Public to understand what is going on would be to go back to calling the Deficit the Public Sector Borrowing Requirement, remember the good old PSBR, the only chanmge I would make would be to call it the Annual PSBR.
So let's here it for the APSBR and the National Debt.
Ruby Duck
November 14th, 2011 2:11am Report this commentGot to agree with startedcod. Would also request reintstatement of balance of trade figures.
GDP is simply about how much tax can be raised. Valid, but not a measure of the health of the economy.
Sir Everard Digby
November 14th, 2011 7:13am Report this commentInteresting that the spheroid ones inexactitudes include the Second World War. Why stop there? After all the Exchequer got into severe difficulties during the Hundred Years War. Napleonic Wars anyone?
Of course,he does not mention the post-war consequences of those events. If he did, they would prove what an utterly useless analogy he has used.
May I ask what passes for journalism has come to these days?
Someone who picks out the bits of scenarios which fit his argument should not merit column inches -neither should they be allowed anywhere near posiitons of power for that matter.
PS: Anyone know how many of his 'predictions' have actually come to pass?
tb
November 14th, 2011 8:04am Report this comment"Brownies", can't we just call them lies and let them argue why they're being truthful.
Nicholas
November 14th, 2011 8:29am Report this commentLola agreed. And the money spent during the war defeated National Socialism whereas the money wasted by Balls & Co entrenched New Labour's brand of national socialism in Britain.
These people are poisonous.
Sean Haffey
November 14th, 2011 9:20am Report this commentBalls caused the problem.
What makes him think he's qualified to mandate a solution?
Chris lancashire
November 14th, 2011 9:28am Report this commentLove the tweet from Balls, translation: "fair enough, Pete, you caught me out lying on the debt, what I really meant was ..."
R2-D2
November 14th, 2011 9:28am Report this commentAccording to Fig.1 in http://www.ifs.org.uk/bns/bn26.pdf, the public sector deficit was 7% in 1946, 1% in 1947 and -2% in 1948. In what sense is that "much steadier" than the current pace of deficit reduction?
R2-D2
November 14th, 2011 9:29am Report this commentAccording to Fig.1 in http://www.ifs.org.uk/bns/bn26.pdf, the public sector deficit was 7% in 1946, 1% in 1947 and -2% in 1948. In what sense is that "much steadier" than the current pace of deficit reduction?
R2-D2
November 14th, 2011 9:29am Report this commentAccording to Fig.1 in http://www.ifs.org.uk/bns/bn26.pdf, the public sector deficit was 7% in 1946, 1% in 1947 and -2% in 1948. In what sense is that "much steadier" than the current pace of deficit reduction?
Axstane
November 14th, 2011 10:15am Report this commentThe question is does Balls actually know the difference between the National Debt and the annual deficit? If so why does he set out to mislead the public?
If he doesn't then let him get the hell out of there.
We had many years of budget austerity after WWII with rationing of many goods continuing long after any tactical reason for shortage had gone. At the same time there were very stringent exchange controls and a massive devaluation. Needs must when the devil drives.
The current situation is in no way similar and Balls has no answers, only this distorted logic that he puts out.
oldtimer
November 14th, 2011 10:19am Report this commentThey, the politicians, are all untrustworthy on this issue. There is a tendency to conflate annual deficits with the accumulated national debt. Now there is the Balls reference to "borrowings". Which borrowings are these? Is he referring to annual borrowings (otherwise known as the deficit)? Or is he referring to the total national debt?
Some politicians realise they have now been rumbled on conflating deficit and debt. Perhaps the choice of the word "borrowings" is the new way to befuddle BBC interviewers and the general public.
Rue de la Loi
November 14th, 2011 11:06am Report this commentAgree completely with Lola and Axstane; the airy dismissal of our curent debt levels omits any appreciation of the grinding austerity endured as Britain's reward for winning the war. Sacking a few Five-a-Day advisers doesn't even compare.
Ghengis
November 14th, 2011 11:13am Report this commentNicholas: and now the removal of elected Prime Ministers has been adopted, how long will it be before Sovereigns are so dealt with.
Occasional Ostrich
November 14th, 2011 12:04pm Report this comment"Son of Brownies?"
How come? Balls wrote them all anyway. Didn't he?
toni
November 14th, 2011 12:10pm Report this commentHJ. It was the Tories who espoused the credit card analagy not Labour.
Pete Hoskin
November 14th, 2011 12:31pm Report this commenttoni: And Coffee House picked them up on it!
www.spectator.co.uk/coffeehouse/6849863/osbornes-credit-card-fraud.thtml
nonny mouse
November 14th, 2011 1:21pm Report this commentAfter World War 2 we had years of austerity. We had to resort to borrowing billions from the Americans to get back on our feet. Maybe he would like us to borrow similar amounts from the IMF?
Would Balls reintroduce ration books so that we could follow the post WW2 plan to pay off the debt?
If I remember rightly it was a Conservative government that scrapped rationing and many of the other planned economy policies that were keeping us in austerity.
Paddy
November 14th, 2011 2:25pm Report this commentI watched the interview and the bit I liked the best was:
"We’re now in a position where David Cameron, George Osborne, Nick Clegg are desperately trying to tell people a new message that however bad it is it’s all the Euro’s crisis. It won’t wash and it’s important that you, the BBC, the wider world don’t fall for this argument".
I hope the BBC, Sky and general media have got this message:
"It's important that you, the BBC, the wider world don't fall for this argument".
Classic Balls.
HJ
November 14th, 2011 4:49pm Report this commenttoni and Peter Hoskin:
Not so. Here is an example of Labour supporters making out that reducing the deficit is equivalent to paying off a credit card:
www.leftfootforward.org/2011/09/ed-miliband-speeches-are-getting-better/
They have been spinning this nonsense in Labour circles for a while.
Woody
November 14th, 2011 6:03pm Report this commentAs soon as I see Balls appear on the box, I switch over. No commentator ever chanllenges him, he is just allowed to waffle on.
As you clearly read this blog Mr Balls, let me say you are a disgrace to british politics. You and your boss, Mr Brown, took this country to the edge of bankruptcy and for that I will never forgive you.
Barry Walters
November 15th, 2011 9:16am Report this commentAnd, after WWII the Labour Government increased borrowings to pay out the shareholders in the various natonalisations.
They did not turn out well!
Jason Radley
November 17th, 2011 3:56pm Report this commentBalls is just another clueless Keynesian.
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