Given that Ed Balls’ strategy has backfired on his party so far, with Labour ten
points behind the Tories on economic credibility, something has to change. Either the policies, or the shadow chancellor. Read between the lines of Balls’ speech today, and you can see a man
backtracking – and trying to hold on to his job. Even when Balls tells porkies, he does so with imagination and élan. He is always worth listening to. He had the 8.10am slot on Today
this morning. Here’s what jumped out at me:
1) Mea Culpa, kinda. The other day in the Commons, Balls said sorry – you could tell then that it’s the first of many. He repeated it again, while making clear that he is
no more guilty than any finance minister anywhere around the world. “The banking crisis was a disaster. All over the world, banks behaved irresponsibly and regulation wasn’t tough
enough. We were part of that. I’m sorry for that mistake, I deeply, deeply regret it. What we failed to see, around the world, was the scale of those risks. I’m sorry about
that.”
2) But he still repeats “too far, too fast” line about cuts. Albeit he now bolts on the end that going slower would not avert “tough decisions in the future” which
will be his appeal for credibility.
3) Then he says Cameron/Osborne cuts are “clearly not working”. He slips back into form, drawing a false link between government cuts and the evaporation of the recovery. In
fact, 2010-11, the coalition’s first year in power, saw the highest state spending in British history. I’d say that the return of inflation had more to do with undermining confidence
and growth, but Balls’ ideology means he has to blame cuts.
4) “America is in a very difficult place” – yes, because Obama rejected austerity and put in its place a trillion dollar stimulus which didn’t work. I wonder what
Balls learned from that. Ireland, by contrast, is growing at 1.6 per cent this year, almost twice the rate of Britain. I suspect that soon, the ambitious fiscal reformers will be doing better than
the UK’s moderate fiscal reformers. So Balls will have more awkward international examples disproving his theory.
5) “If there is a profit from the sale of the bank shares, don’t use that for a tax cut.” – I blogged earlier about this. The bank sale may haul a one-off delivery of £3.4bn, enough to accelerate the seven-year
programme of deficit reduction by about a week. So you can’t use that for a tax cut. Balls’ point here, which he’ll repeat all day, depends on his interviewer not knowing how
little the bank sales will raise.
6) And his mysterious five-year plan. He’ll save it for his speech at noon – we’ll report back here on Coffee House.
Balls also gives an interesting interview to Andy Grice in the Indy this morning where he comes up with the quote of the day: “My instinct is that you should always try to reduce every tax if you can,” he says in the Indy interview. His instinct, demonstrated in government and through the last year, is that you should always increase spending if you can. He had it paid for not by tax, but by running up the national debt – which is why the UK last balanced its budget in 2000/01. This unfunded profligacy, not just inept and fractured banking regulation, is what Balls should be apologising for.
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