The Most Annoying Figure in British Politics™ is spread absolutely everywhere
today: in the newspapers, on Twitter and, most notably, in interview with the New Statesman’s Mehdi Hasan.
The interview really is worth reading, not least because it pulls out and probes some of Ball’s arguments, both for himself and for Labour’s fiscal reasoning. Guido has already dwelt on the former — “I’m a very loyal person,” quoth the shadow chancellor — but what about the latter?
Three things struck me:
1) Oh, yeah, there was a structural deficit. The Big News here is probably Balls’s admission that Labour did run up a structural deficit (i.e. a deficit that remains even when the economy is functioning as well as it should) after all. It was only back in January that the shadow chancellor said “I don’t think we had a structural deficit at all in that period.” Yet here he is with the slippery line that “in retrospect, of course there was a structural deficit.” His excuse for missing it at the time was that “people reappraised what their view of what trend growth was,” once the financial crisis hit. But it’s a weird sort of excuse: after all, “people” such as the Institute for Fiscal Studies were suggesting that the Treasury had it wrong on growth, and ergo the structural budget deficit, well before the crash hit. Here, for instance, is what they had to say in 2005:
“If the Treasury’s forecasts for the public finances are unduly optimistic, as a number of independent commentators believe, an incoming Conservative government might also inherit a significant structural budget deficit.”
And, what’s more, bodies such as the OECD and IMF estimated, in 2006, that the UK was running a structural deficit of 2.7 per cent of GDP.
What Balls is effectively claiming — now — is that the Treasury got it wrong at the time. They are the “people” who subsequently reappraised their views. Whether this is an admission of guilt on his and Brown’s part, or whether it implicates the civil service number-crunchers, I’m not sure. But, in either case, it’s some distance from what he said in January.
2) Wriggle, wriggle. And the awkward excuses don’t stop there, oh no. Explaining away his previous dismissal of Alastair Darling’s deficit reduction plan, Balls says that, “That’s what I said in 2009. I was worried in 2009 about the pace of the cuts. What I’m happy to say now is that, compared to what I feared in 2009, unemployment came in better than we’d expected.” Again, it’s a peculiar one. Does the fact that Labour are still sticking, by and large, with the Darling Plan mean that unemployment is still coming in better than Balls expected? If so, it rather undermines one of his party’s favourite attacks against the coalition: that they are presiding over extreme job losses. And does it mean that Labour’s deficit reduction plan is subject to change based on unemployment forecasts?
3) Osborne-seeking missiles. Balls really doesn’t hold back when it comes to attacking his counterpart, George Osborne. The attack is broadly what we’ve heard before — that the Chancellor is cutting for reasons of ideology, rather than fiscal necessity — but it is delivered even more venomously than usual. On a few occasions, Balls questions not just Osborne’s politics, but also his brainpower — as in, “I’m increasingly of the view that George Osborne has no idea what the phrase ‘fiscal multiplier’ means, either, which is part of the problem.” The plan, if there is one, appears to be this: to cast Balls as The Smartest Man in the Room, whose brain will deliver us from economic despair. Whether it will work is another matter altogether.
If anything, this is an interview to demonstrate how — despite their poll leads — Labour are struggling to convince on the public finances. When their shadow chancellor is having to caveat and retrospectively tweak some of his main arguments, it’s hardly going to persuade. The Two Eds are, it must be said, more convincing when it comes to the cost of living, and all that. But the fundamentals are still eluding them.
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